10) In the Phillips curve equation, which of the following will NOT cause a rise in the current inflation rate? A) a rise in the minimum wage, z B) a rise in the expected inflation rate C) a rise in the employment insurance, z D) a drop in the markup, ? E) a fall in the unemployment rate 2. Using the AS and AD, WS and PS and IS-LM graphs, illustrate and explain the short run and medium run effects of a less stringent enforcement of existing antitrust legislation (Monopolist market power increased). Explain what happens to P, Y, i, W/P, I and u.

10) In the Phillips curve equation, which of the following will NOT cause a rise in the current inflation rate? A) a rise in the minimum wage, z B) a rise in the expected inflation rate C) a rise in the employment insurance, z D) a drop in the markup, ? E) a fall in the unemployment rate 2. Using the AS and AD, WS and PS and IS-LM graphs, illustrate and explain the short run and medium run effects of a less stringent enforcement of existing antitrust legislation (Monopolist market power increased). Explain what happens to P, Y, i, W/P, I and u.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The Short Run Phillips Curve describes what? A predictable negative relationship between the output gap and the unemployment rate When the output gap is negative (a recessionary gap), the unemployment rate is above the natural rate. O A positive output gap implies an unemployment rate below the natural rate of unemployment. The negative short-run relationship between the unemployment rate and the inflation rate.
1. Suppose the Phillips curve is represented by the following equation: a, - 1, = 0.2– 2u,. Given this information, we know that the natural rate of unemployment in this economy is 2. In the following production function, Y = f(K, NA), a 20% increase in A will cause _ (labor / effective labor / output / output per worker) to increase by 20%?
If policy makers think the natural rate of unemployment is lower than it really is, then their policies designed to move the economy to the estimated natural rate, if continued over the long run, will: a. shift the long-run aggregate supply curve to the right. b. cause continuing inflation. c. shift the supply curve of labor to the right. d. lead to a lower price level. e. keep the economy below its potential GDP level.
Consider an economy for which wage and price inflation are initially 3% under a zero output gap. Calculate price inflation by the end of the current period under a new output gap of 6%. (Hint: you need to use the Phillips curve equation)
Suppose πt = πt−1 −2(ut −0.04) is the Phillips Curve equation in the economy. Answer thefollowing questions.a. What is the natural rate of unemployment?b. Graph the short run and the long run relationship between inflation and unemployment.c. How much cyclical unemployment is necessary to reduce inflation by 10 percentagepoint?d. The inflation is running at 12 percent. The Central Bank wants to reduce it to 9 percent.Give two scenarios that will achieve the goal.
Consider the Friedman-Phelps model of the Phillips Curve as discussed in lecture. Assume the economy is currently at Y-full employment. When the Fed sells government securities to the public, and there are no other exogenous shocks to the economy, which one of the following is predicted to happen? The actual inflation rate increases, and the unemployment rate increases permanently. O The actual inflation rate increases, and the unemployment rate increases first and then gradually goes back to the natural rate of unemployment. O The actual inflation rate decreases, and the unemployment rate increases first and then gradually goes back to the natural rate of unemployment. The actual inflation rate decreases, and the unemployment rate increases permanently. The actual inflation rate decreases, and the unemployment rate decreases first and then gradually goes back to the natural rate of unemployment.
According to the St. Louis Federal Reserve the natural unemployment rate is 4.44 percent (Q2 2022 B) and the U.S. Bureau of Labor Statistics (BLS) estimates the U.S. unemployment rate (U3, March 2022 ) to be 3.6 percent. If you expect unemployment to continue to fall the short-run Phillips curve would predict: O A decrease in the inflation rate. An increase in the inflation rate. A decrease in the unemployment rate. An increase in the unemployment rate.
2. Analyze the effects of the following developments on both the short-run and the long-run Phillips curves. Use the graphs and explain in detail: a) a rise in the natural rate of unemployment b) a substantial increase in the price of energy
The equation of the Phillips curve from 1970 to 1995 is: -17.4-1.2u₁. The natural rate of unemployment using this curve is 6.2%. (round your answer to one decimal place) The equation of the Phillips curve from 1996 to 2018 is: x=2.8% -0.16+ Which of the following explains why the natural rate of unemployment cannot immediately be calculated from the Philips curve? A. The expression only provides Ⓡ and a. B. The equation does not include a specific value for expected inflation. C. The expression only provides (m + z) and . D. None of the above. Using the line drawing tool, accurately graph the Phillips relation=2.8% -0.16 with inflation on the vertical axis and unemployment on the horizontal axis. Carefully follow the instructions above and only draw the required object. What is the natural rate of unemployment using the relation = 2.8% -0.16u, under the assumption that the value of x=2% The natural rate of unemployment fell to 5% between 1970-1995 and 1996-2018? (round your answer to…
The long-run Phillips Curve describes: The relationship between unemployment and inflation after expectations of inflation have had time to adjust to experience. O An increase in expected inflation will cause nominal wages to rise, shifting both SRAS and the Phillips Curve up. That there is a predictable negative relationship between the output gap and the unemployment rate but it is not one to one. The negative short-run relationship between the unemployment rate and the inflation rate.
Figure 35-6 Use the graph below to answer the following questions. Inflation Rate D A Curve 1 F U/ B Curve 2 Unemployment Rate Refer to Figure 35-6. Curve 2 is the a. long-run Phillips curve. b. short-run aggregate demand curve. c. short-run Phillips curve. d. long-run aggregate demand curve.
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