Since the short-run Philips curve is downward sloping and the long-run Phillips curve is vertical there can never be simultaneous unemployment inflation TRUE / FALSE
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Since the short-run Philips curve is downward sloping and the long-run
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- The long-run Phillips curve will be upward sloping if persistent high inflation discourages investment in technological improvement TRUE / FALSE Since the short-run Philips curve is downward sloping and the long-run Phillips curve is vertical there can never be simultaneous unemployment inflation TRUE / FALSEIf the economy is at the point where the short-run Phillips curve intersects the long-run Phillips curve: unemployment equals the natural rate and expected inflation is greater than actual inflation. unemployment is below the natural rate and expected inflation equals actual inflation. 0 unemployment equals the natural rate and expected inflation equals actual inflation. 0 unemployment is above the natural rate and expected inflation equals actual inflation.Explain how the expected inflation rate affects the short-run Phillips curve. Be sure to mention the role played by the money wage rate.
- A downward sloping Philips curve implies that output increases as inflation rises. TRUE / FALSE An increase in worker productivity brought about by the introduction of new technology decrease aggregate demand, since workers will lose their jobs. TRUE / FALSE A decrease in expected inflation both the short-run and the long-run Phillips curves to the left. TRUE / FALSESuppose that the Phillips curve is given by +0.1-2 U₂ and expected inflation is given by -(1-0) * +04-1 where 0 is equal to zero and x 0.02 and does not change. The economy is initially at the natural rate of unemployment, which is 5%, when the authorities decide to bring the unemployment rate down to 3% and hold it there forever. With 0 equal to zero, this will yield a 6% rate of inflation every year. Now suppose that in year (t+6), 0 changes to 1. 0 might increase in this way because OA government policy would mandate inflationary expectations. B. inflation expectations adapt to persistently positive inflation OC. inflation expectations change constantly. OD. inflation expectations always adapt immediately to the last period's inflation. In year (+6), the inflation rate will be % (Enter your response as an integer.) In year (+7), the inflation rate will be % (Enter your response as an integer.) In year (+8), the inflation rate will be%. (Enter your response as an integer)Assume that the economy of Country X has an actual unemployment rate of 7%, a natural rate of unemployment of 5%, and an inflation rate of 3%. Using the numerical values given above, draw a correctly labeled graph of the short-run and long-run Phillips curves. Label the current short-run equilibrium as point B. Plot the numerical values above on the graph. Assume that the government of Country X takes no policy action to reduce unemployment. In the long run, will each of the following shift to the right, shift to the left, or remain the same? Short-run aggregate supply curve. Explain Long-run Phillips curve. Explain
- According to the figure below, Inflation Rate (percent) 8 7 6 3 2 1 0 b. PC2? PC2 % 1 % 2 PC₁ 3 4 Rightward AS shifts cause leftward Phillips curve shifts. 5 6 What inflation rate would occur if the unemployment rate were 5 percent, with Instructions: Round your responses to the nearest 0.5 percent (e.g., 1.0, 1.5, 2.0). a. PC₁? Unemployment Rate (percent) 7 8In the decade through 2020, inflation was consistently low. If people adjusted their inflation expectations to their actual inflation experience, this would shift the short-run Phillips curve down. shift the short-run Phillips curve up. shift the long-run Phillips curve to the left. Shift the long-run Phillips curve to the right.As with demand and supply analysis, changes in the economy can cause both shifts of and movements along the short-run Phillips curve. Which of the following would cause a shift of the short-run Phillips curve? Check all that apply. An increase in government spending A decrease in short-run aggregate supply An increase in the expected inflation rate
- Suppose the Phillips curve in Country A is estimated to be ??=???−0.25(??−?∗?)πt=πte−0.25(ut−ut∗)(supplied in picture) The natural rate of unemployment in the year 2020 equals 3%. Inflation in the year 2020 is expected to be around 1%. The Okun’s coefficient in Country A equals 2. The central bank of Country A is considering three possible monetary policy scenarios for the year 2020. Scenario 1: the central bank performs a monetary contraction, and the inflation rate becomes 0.5%. Scenario 2: the central bank performs a monetary expansion, and the inflation rate becomes 1.5%. Scenario 3: the central bank keeps monetary policy unchanged, and the inflation rate matches expected inflation and equals 1%. For each of these policy scenarios, 1) Determine the corresponding rate of cyclical unemployment in 2020 2) Determine the actual unemployment ??ut that would result in 2020 3) Use Okun’s law to determine the corresponding…If inflationary expectations increase, the Phillips curve will A) become flat B) become vertical C) shift to the left D) shift to the rightIn which situation will the economy move to a point on the Phillips curve where unemployment is higher? if the inflation rate increases if the government increases its expenditures if the Bank of Canada decreases the money supply if expected inflation increases
