mework (Ch 23) 5 4 3 2 1 0 INFLATION SRPC 2 3 4 UNEMPLOYMENT (Percent) 0 6 As expected, inflation and the short-run Phillips curve shifts Which of the following is an example of a cost of inflation? Check all that apply. Increased variability of relative prices A restaurant's costs to reprint its menu to reflect fluctuating prices A general decrease in purchasing power An unintended redistribution of wealth from borrowers to lenders a r 5 Cal illustrating that the cost of fighting inflation is O 6:32 4/29/20

mework (Ch 23) 5 4 3 2 1 0 INFLATION SRPC 2 3 4 UNEMPLOYMENT (Percent) 0 6 As expected, inflation and the short-run Phillips curve shifts Which of the following is an example of a cost of inflation? Check all that apply. Increased variability of relative prices A restaurant's costs to reprint its menu to reflect fluctuating prices A general decrease in purchasing power An unintended redistribution of wealth from borrowers to lenders a r 5 Cal illustrating that the cost of fighting inflation is O 6:32 4/29/20

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Annual Rate of Inflation (%) 12 C3 C₂ C₁ 160 B4 B3 B₂ B₁ 567 8 9 Unemployment Rate (%) Refer to the above graph. The long-run relationship between the rate of inflation and the unemployment rate is represented by: A line connecting points B₁ and C₁ The zigzag line, B₁C₁B₂C₂B3C3B4 A line connecting points B₁B₂B3B4 A line connecting points C₁C₂C3
Use the table below to calculate core and headline inflation in each time frame relative to the base year, assuming that each category is weighted equally in the calculation of headline inflation. Instructions: Round your answers to one decimal place. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Year 2014 2018 2014-2018 Food and energy 120 105 Other goods and services 102 107 Core inflation (relative to the base year the base) Headline inflation (relative to
1. The fisher effect matters in terms of inflation given that A) borrowers agree to loan terms with uncertain information about future inflation B) lenders set nominal interest rates with a forecast for future inflation, which may or may not be correct. C) redistribution can take place when unexpected changes to inflation occurs. D) A&B only E) All of the above 2. If your real wages are decreasing although you have received salary raises each year, A) you should quit your job B) your purchasing power is decreasing C) the rate of inflation is likely decreasing D) your nominal wages are rising faster than inflation E) none of the above 3. Holding velocity growth and GDP growth constant is generally a long run concept. What is one conceptual takeaway if a central bank has plans to consistently increase money supply in the long run? A) There will be higher levels of economic growth B) This activity will likely only lead to higher inflation C) There will be higher levels of GDPD)…
5. Consider the standard Phillips curve. Select all the correct statements: (a) A positive aggregate demand shock will lead to an upward shift in the Phillips curve. (b) Changes in short-run output will lead to movements along the Phillips curve. (c) A negative inflation shock will lead to movements along the Phillips curve. (d) A shock to the price of oil will lead to a shift in the Phillips curve. (e) The inflation rate will always be equal to zero when short-run output is equal to zero.
Figure 17-5 Inflation rate (percent per year) 10% 5 0 Long-run Phillips curve 5.5% 7.5 Short-run Phillips curve Unemployment rate (percent)
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
Suppose that people expect inflation to equal 3 percent, but in fact, prices rise by 5 percent. Describe how this unexpectedly high inflation rate would help or hurt the following:a) the governmentb) a homeowner with a fixed-rate mortgage
A generalization of the fisher effect that can be applied to other variables is the relationship between real price growth and nominal price growth if we know the inflation rate. We can express this relationship T, where g is the growth rate (real or nominal) and t is inflation rate. Use this as greal information for problems 10-12. gnomial - 10. Assume that data shows the nominal price of a new Nissan Maxima was $12,000 in 1992 and $15,000 in 2002, but you also found a reliable source that claimed real price growth for Maximas this claim about real price growth A) 16.5% B) 5% C) 10% D) 8.5% E) Not enough information to determine was closer to 8.5%. For experienced from 1992 to 2002? to be true, how much inflation was 11. Assume that the inflation rate is the level you found in 10. If the real price growth for a Mercedes- AMG was 10%, and the nominal price in 1992 was 2002? $42,000; what is the nominal price of the Mercedes in A) $50,000 B) $53,130 C) $56,750 D) $60,070 E) $77,000 12.…
Which of the following economic changes are consistent with cost-push inflation? (More than one may apply) A. An increase in the price level B. A sudden and sharp decline in the quantity of money issued by the central bank C. Rising unemployment
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
Inflation at lowest rate in 5 years Inflation rate (percent per year) In September, inflation in the United Kingdom fell to 1.1% a year, its lowest in 5 years. Analysts expected an inflation rate of 1.3% a year. 1.7- Source: The New York Times, October 13, 2009 With the unemployment rate at 8 percent and the natural unemployment rate at 6 percent, sketch the short-run Phillips curve and mark on your graph the point which shows the situation in September. Label the point A. 1.5- 1.3- The unemployment rate is 8 percent and the natural unemployment rate is 6 percent. 1.1- Draw a point that shows the unemployment rate and the inflation rate in September. Label it A. Draw a point that shows the natural unemployment rate and the expected inflation 0.9 rate. Label it B. 10 12 Unemployment rate (percent of labor force) Draw the short-run Phillips curve that is consistent with these data. Label it. >>> Draw only the objects specified in the question. Selected: Delete Clear none Next
4. The expectation augmented Phillips curve takes the form T = T° – 3(u – ū), %3D with the natural rate of unemployment ū = 0.04. Assume that the Okun's law holds so that a 1 percentage point increase in the unemployment rate reduces GDP by 2% of full-employment output. What is the percentage deviation of output from full- employment output if actual inflation is 9% and expected inflation is 4.5%? (а) -3%. (b) -2%. (c) 2%. (d) 3%. (Right answer)