Suppose that 60% of the workers have indexed labour contracts. The Phillips curve is given by л₁ = π +0.12 - 2u. Expected inflation is given by л = (1 − 0)ñ + Оπ₁-1 where 0 is assumed to be zero. Suppose that the rate of unemployment is initially equal to the natural rate. In year t, π is assumed to be 2% and the authorities decide to bring the unemployment rate down to 3% and hold it there forever. What is the inflation rate at t + 3?

Suppose the Phillips curve is given by the following: πt = π² + (µ+z) aut πι = π + 0.1 Where: π = πt-1 Suppose initially, 0 = 0 a. What is the natural rate of unemployment? 2ut b. Suppose ut = Un. In year t, government authorities decide to bring the unemployment rate down to 3% and hold it there forever. Determine the rate of inflation in years t, t+1, t+2. c. Suppose in year t+5,0 increases from 0 to 1 and ut = 3%. Determine the rate of inflation in year 5 and year 6.

Assume that the equilibrium level of Y (or real GDP) is $10 trillion, the actual unemployment rate is 4.0%, and the natural unemployment rate is 5%. Okun's Law tells us that we should increase Y by 1.6% O increase Y by 2.0% decrease Y by 1.6% decrease Y by 2.0%

answer only part d , e and f

d, e, f

Suppose that the relationship between inflation rate (π) and unemployment rate (u) is described by the following equation: πt – πte = (m + z) – αut where m = 0.05, z = 0.04, and α = 2. In this economy, the authorities keep unemployment rate at 4% forever. a. If the modified Philips curve describes the relationship between π and u correctly, how should “πte” be specified? Rewrite the equation using this specification. Assume that πt–1 = 1%. Compute πt, πt+1, and πt+2. b. Do you believe the answer in part (a)? Why or why not? c. Derive the natural rate of unemployment.

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.…

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?

If the natural rate of unemployment is 4% and the economy is producing at 105% of potential output, the output gap is +5%, and Okun's law predicts an unemployment rate of O 1.5% 3% 2.5% 0.5%

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%?