in the preceding year (i.e., year t-1), inflation was 3 percent ⚫ in the current year (i.e., year t), unemployment is 5 percent and there is a temporary price shock of 2 percent. ⚫ Okun's law prevails in Emunistan: Y-Y -100- = (%) 2(UU) (%) 14. The unemployment gap in the current year is a) -1(%) b) 0(%) c) 1(%) 15. The inflation in the current year is a) 4(%) b) 4.5(%) percent. - d) None of a c percent. c) 5(%) d) 5.5(%) ► [Q16-Q17] Suppose that the Emunistani economy has been in a long-run eq'm with 10 percent inflation. Further suppose that Bank of the central bank permanently lowers annual inflation to 5 percent evenly over the span of five years. (Ignore the temporary price shock p.) 16. What percent of annual GDP is lost each year over the course of the 5-year disinflation? a) 4(%) b) 4.5(%) c) 5(%) d) 5.5(%) 17. What is the sacrifice ratio? a) 3 b) 4 c) 5 d) 6
in the preceding year (i.e., year t-1), inflation was 3 percent ⚫ in the current year (i.e., year t), unemployment is 5 percent and there is a temporary price shock of 2 percent. ⚫ Okun's law prevails in Emunistan: Y-Y -100- = (%) 2(UU) (%) 14. The unemployment gap in the current year is a) -1(%) b) 0(%) c) 1(%) 15. The inflation in the current year is a) 4(%) b) 4.5(%) percent. - d) None of a c percent. c) 5(%) d) 5.5(%) ► [Q16-Q17] Suppose that the Emunistani economy has been in a long-run eq'm with 10 percent inflation. Further suppose that Bank of the central bank permanently lowers annual inflation to 5 percent evenly over the span of five years. (Ignore the temporary price shock p.) 16. What percent of annual GDP is lost each year over the course of the 5-year disinflation? a) 4(%) b) 4.5(%) c) 5(%) d) 5.5(%) 17. What is the sacrifice ratio? a) 3 b) 4 c) 5 d) 6
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![in the preceding year (i.e., year t-1), inflation was 3 percent
⚫ in the current year (i.e., year t), unemployment is 5 percent and there is a
temporary price shock of 2 percent.
⚫ Okun's law prevails in Emunistan:
Y-Y
-100-
=
(%) 2(UU) (%)
14. The unemployment gap in the current year is
a) -1(%)
b) 0(%)
c) 1(%)
15. The inflation in the current year is
a) 4(%)
b) 4.5(%)
percent.
-
d) None of a c
percent.
c) 5(%)
d) 5.5(%)
► [Q16-Q17] Suppose that the Emunistani economy has been in a long-run eq'm
with 10 percent inflation. Further suppose that Bank of the central bank
permanently lowers annual inflation to 5 percent evenly over the span of five years.
(Ignore the temporary price shock p.)
16. What percent of annual GDP is lost each year over the course of the 5-year
disinflation?
a) 4(%)
b) 4.5(%)
c) 5(%)
d) 5.5(%)
17. What is the sacrifice ratio?
a) 3
b) 4
c) 5
d) 6](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd40e167b-5e99-4568-8784-54183e51326f%2F8dc1d9b1-254b-4af1-b2e3-d19b674bff1a%2Ftjes9ah_processed.jpeg&w=3840&q=75)
Transcribed Image Text:in the preceding year (i.e., year t-1), inflation was 3 percent
⚫ in the current year (i.e., year t), unemployment is 5 percent and there is a
temporary price shock of 2 percent.
⚫ Okun's law prevails in Emunistan:
Y-Y
-100-
=
(%) 2(UU) (%)
14. The unemployment gap in the current year is
a) -1(%)
b) 0(%)
c) 1(%)
15. The inflation in the current year is
a) 4(%)
b) 4.5(%)
percent.
-
d) None of a c
percent.
c) 5(%)
d) 5.5(%)
► [Q16-Q17] Suppose that the Emunistani economy has been in a long-run eq'm
with 10 percent inflation. Further suppose that Bank of the central bank
permanently lowers annual inflation to 5 percent evenly over the span of five years.
(Ignore the temporary price shock p.)
16. What percent of annual GDP is lost each year over the course of the 5-year
disinflation?
a) 4(%)
b) 4.5(%)
c) 5(%)
d) 5.5(%)
17. What is the sacrifice ratio?
a) 3
b) 4
c) 5
d) 6
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