b. The change that takes place between 2018 and 2019 could be caused by (Click to select) v stabilization polices. The change that takes place between 2019 and 2020 could have been caused by (Click to select) v stabilization polices. c. Suppose that in 2021 the inflation rate is 5% and the unemployment rate is 11%. What has happened to the Phillips curve for Acadia? What could explain this change? Because the inflation rate is (Click to select) v and the unemployment rate is (Click to select) v than the values for these two variables during 2018 to 2020, the Phillips curve for Acadia has shifted (Click to select) v This shift is likely due to a(n) (Click to select) v in (Click to select) v with one of the following factors as a possible cause: O A drop in labour productivity. O A reduction in input prices. O A decrease in the consumption of durable items. An increase in investment spending.

b. The change that takes place between 2018 and 2019 could be caused by (Click to select) v stabilization polices. The change that takes place between 2019 and 2020 could have been caused by (Click to select) v stabilization polices. c. Suppose that in 2021 the inflation rate is 5% and the unemployment rate is 11%. What has happened to the Phillips curve for Acadia? What could explain this change? Because the inflation rate is (Click to select) v and the unemployment rate is (Click to select) v than the values for these two variables during 2018 to 2020, the Phillips curve for Acadia has shifted (Click to select) v This shift is likely due to a(n) (Click to select) v in (Click to select) v with one of the following factors as a possible cause: O A drop in labour productivity. O A reduction in input prices. O A decrease in the consumption of durable items. An increase in investment spending.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(a) What events of the 1970s and 1980s made economists believe that the shortrun relationship between inflation and unemployment was unstable (not fixed and permanent)? (b) Explain, using a diagram(s) and the concept of stagflation, the relationship between shifts in the SRAS curve and the position of the short-run Phillips curve.
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If the actual unemployment rate falls below the natural unemployment rate, how does the actual inflation rate change? The actual inflation rate ________. A. doesn't change, but the short-run Phillips curve shifts leftward B. rises up along the short-run Phillips curve C. doesn't change, but the expected inflation rate rises D. rises and the natural unemployment rate falls
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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…
3. An economy has the following equation for the Phillips curve: n = En – 0.5(u – 6) People form expectations of inflation by taking a weighted average of the previous two years of inflation: En = 0.7 T.1 + 0.3 r.2 Okun's law for this economy is: (Y - Y.)/ Y.j= 3.0 – 2.0 (u-u.1) The economy begins at its natural rate of unemployment with a stable inflation rate of 5 percent. e. On the same graph you used in part (b), graph the short-run tradeoff the economy faces at the end of this 10-year period. Label the point where the economy finds itself as point C. (Again, use numerical values.) f. Compare the equilibrium before the recession with the new long-run (period ten) equilibrium. How much does inflation change? How many percentage points of output are lost during the transition? What is this economy's sacrifice ratio? 6% =E * -0.5 / U-c) ス E 大 - d.s u+3 A: (EX + 3 ) + (-o.so) CEX +3 ) - 0-5 u (6,5) Phillips curve 2. 1 2 3 4 unemployment (u). C D F G H K 1 Variables Year 1 Year 2 Year 3…