Under the new incarnation or the Phillips curve (where inflation is persistent). derive the natural rate of unemployment if T = T + (m +z) - au Type pi for Tt, pie for T, and a for a, Using this equation, explain why the natural rate of unemployment may differ between countries.
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- In each of the following scenarios, indicate which parameter in the Search and Matching Model of Unemployment might change in that scenario and why and whether it will increase or decrease. Using the two graphs outlined in the Notes on Search and Matching unemployment, indicate what happens to the Beveridge, Definition, WS, and JC curves (in both a wage-tightness graph and a vacancies-searchers graph) and steady state θ, w, v and s in response to the change in the parameter. State in words which curve shifts and in what direction and what happens to the steady state equilibrium variables. Drawing a graph is desirable but not necessary. a. The appearance of LinkedIn.com allows employers to post open positions on the webstie and to find suitable workers to hire faster. b. Sectoral shifts in the economy become more frequent so that different jobs (industries) are destroyed more often.In the equation for the Phillips curve, TTt = πΕ + (μ+ z) - αυ, what does alpha stand for? What is the effect of an increase in alpha on the estimate of the natural rate of unemployment?In a country with the following Phillips curve: π = πe - 3(u - .06), when π = .06 and πe = .03, the unemployment rate is A) .03. B) .05. C) .07. D) .09.
- Now let's consider this same scenario in terms of the accelerationist Phillips curve. The labor force is N=64. Find the rates of unemployment before and after as (N-L)/N and map them into our surprise inflation indexes, EP/P. Label the natural rate of unemployment, show the cyclical rate of unemployment.Using the Phillips curve: imagine a country is having a higher unemployment rate than usual for a longperiod of time (higher than the natural rate). What should happen in the short term and in the longterm?Use the following Phillips curve equation to answer this question: πt - πt-1 = (m + z) - αut. Which of the following will cause an increase in the natural rate of unemployment? A) a reduction in m B) an increase in z C) an increase in α D) a reduction in expected inflation E) none of the above
- Suppose that the Phillips curve is given byπ t = π te − α ( u t − u n ) ,where the estimated value of the natural rate of unemployment, un = 4.5% and α = 0.4. The expectations are myopic (i.e. fully backward), thus πte = πt−1.a) What is the sacrifice ratio in this economy? Explain in words.Suppose that at time t = 0 unemployment is initially equal to the natural rate (i.e. u0 = 4.5%) and π0 = 7.5%. The central bank decides that 7.5% inflation is too high and that starting in year 1 it will decrease inflation to 3.5%.Economics Suppose that the Phillips curve is πt = πet − 0.5(ut − un ), and the aggregate production tt tn function is Yt = Nt, where Nt is the number of employed workers. Further assume that the size of labor force is 200. Rewrite the Phillips curve equation in terms of output gap.Šuppose that the Phillips eurve is nt the number of employed workers. Further assume that the size of labor force is 200. Rewrite the Phillips curve equation in terms of output gap. = Tet – 0.5(ut - un ), and the aggregate production tt tn function is Yt = Nt, where Nt is
- One of the Saretec's students is Amanda Shayi, previously an Eskom electrical technician who is completing the seven-month Saretec course to upgrade her skills, to become a wind turbine service technician, thus, maintaining the continuity of power." From the following alternatives, what type of unemployment is applicable, and what type of policy, from which side, is being applied to tackle the unemployment problem caused by the decommissioning of the coal-fired power stations?Which of the following about the Phillips curve is not correct? A) It shows the relation between GDP growth and unemployment. B) It has been redefined as a relation between the change in the rate of inflation and the unemployment rate. C) It was first explored by A. W. Phillips. D) The curve is downward sloping.Explain involuntary unemployment under different theories