Suppose that the central bank in this economy is concerned that inflation is too high and wants to lower the inflation rate by 6 percentage points per To reduce inflation from 8% to 2% in the short run, the central bank would year. A reduction in the rate of inflation is known as have to accept an unemployment rate of True or False: If people have rational expectations, the economy will experience a higher unemployment rate than predicted by the short-run Phillips curve. O True O False

Suppose that the central bank in this economy is concerned that inflation is too high and wants to lower the inflation rate by 6 percentage points per To reduce inflation from 8% to 2% in the short run, the central bank would year. A reduction in the rate of inflation is known as have to accept an unemployment rate of True or False: If people have rational expectations, the economy will experience a higher unemployment rate than predicted by the short-run Phillips curve. O True O False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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E1
In the graph you've just explored, what is the inflation rate if the unemployment rate is 8 percent? ___ percent per year >>> Answer to 1 decimal place. Thank you
Which of the following events would be expected to result in an upward shift of the standard Phillips curve? O The USD is appreciating against the Euro O A positive output gap leads to a more positive unexpected inflation O Wages across the country have risen 5% in the last month O Productivity growth in the United States is increasing
Suppose the Phillips curve is represented by the following equation: n - M1 = 0.3 - 3ut. Given this information, what is the natural rate of unemployment in this economy? %3D 30% O 3% O 10% O 0%
Supposed that each of the following rows represents the choice faced by policy makers given the current set of U.S. institutions and technology. What is the opportunity cost of reducing unemployment from 8 percent to 4 percent? Explain your Choice. a) 4 percentage points of unemployment. b) 6 percentage points of unemployment. c) 6 percentage points of inflation. d) 4 percentage points of inflation. Uemployment Inflation 10 3 8 4 6 5 5 7 4 10
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QUESTION 2 The interaction of demand-pull and cost-push inflation will result: O a. in permanently lower output and prices O b. in permanently higher output and prices Oc. in the same output and lower prices Od. in the same output and higher prices
Rate Inflation 7 6 5 4 N 1 0 -1 -2 -3 0 De graph below depicts a short-run Phillips Curve. Move the line as needed to depict a long-run Phillips curve, then answer the question to the right. O 1 2 3 4 5 6 7 Unemployment Rate 8 9 10 The relationship between inflation and unemployment in the short run is different from their relationship in the long run. Which of the following is an important factor in that difference? Inflation Expectations Tax Rates Price Levels Okun's Law
For this question, assume that the expected rate of inflation is a function of past year's inflation. Also assume that the unemployment rate has been greater than the natural rate of unemployment for a number of years. Given this information, we know that the inflation rate will be approximately equal to the natural rate of unemployment. А. the rate of inflation will approximately be equal to zero. В. C. the rate of inflation should steadily decrease. Op the rate of inflation should steadily increase over time. the rate of inflation should neither increase nor decrease. Е.
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Which of the following will increase our current inflation rate t? None of the answers are correct O a. O b. A beneficial cost shock (positive supply shock) O c. A recessionary gap in period t-1 O d. tt-1
Inflation VPC Y = £200 billion Output Figure 12 Current and equilibrium output In Figure 12 the economy's current output is £200 billion and the equilibrium level of output is shown by the position of the Vertical Phillips Curve (VPC). Which of the following policies could be adopted to achieve a zero output gap? (Choose one or more answers.) Select one or more: O A. An increase in income tax. O B. A quantitative easing initiative. O C. An increase in interest rates. O D. A cut in Value Added Tax. MacBook DII DD F9 000 000 F8 F7 F6 F4 F5