The Phillips Curve shows O A. an inverse relation between the interest rate and exchange rate. O B. an inverse relation between unemployment and inflation. OC. a direct relation between unemployment and inflation. O D. an inverse relation between the price levels and tax revenues.

Suppose workers negotiate for a 5 percent nominal wage increase and expect a 1 percent inflation rate. If the actual inflation rate is 6 percent, then workers A. and firms are both worse off. O B. are better off and firms are worse off. O C. are worse off and firms are better off. D. and firms are both better off. Click to select your answer.

Inflation-rate targeting by an independent central bank O A. feeds inflation expectations. O B. helps price signals work. O C. results in confusing price signals. O D. favours a hands - on emphasis on government discretion.

Suppose the Phillips curve is given by the following: 2ut It Where: π = Tt-1 Suppose πt-1 = 0; at year t, authorities decide to keep unemployment rate at 4% forever. a. Compute the rate of inflation for years t+1, t+2 and t+3. b. Suppose half of labor contract of workers has been indexed. What is the new equation for the Phillips curve? Compute the rate of inflation for years t+1, t+2 and t+3. i. π = 0.1 ii. iii. Compared to your answers in problem (a), what can you conclude?

QUESTION 34 If Mexico lowers its inflation target from 3 percent to 2 percent, the initial response to this will be OA that the AD will shift right. B. None of these answers is correct. OC.che MP curve will shift down. OD.that the AD will shift left. OE. that the AS will shift left. 12

Constant dollars are dollars Select one: O a. corrected for general price level changes. O b.issued by the Federal Reserve with values that fail to change even in the face of inflation or deflation. Oc. measured in terms of current-year prices. O d. issued by the U.S. Treasury with values that fail to change even in the face of inflation or deflation.

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

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