Q3 - Modules L7. Inflation and the Phillips Curve[Suggested word count for Q3: 400 to 500 words]In 2021, (almost after the COVID-19 related lockdowns were relaxed in Australia) Australianconstruction industry was facing high demand resulting into a boom in the construction ofnew housing. This can partly be attributed to the generous economic stimulus packagesgiven by the government (for instance, see the articles below).●Australia launches $470 million stimulus package for construction sectorhttps://www.reuters.com/article/us-health-coronavirus-australia-idUSKBN23B02XPost Pandemic Construction Boomhttps://slattery.com.au/wp-content/uploads/2021/12/Slattery-National-Market-Update-December-2021.pdfUsing the AD and Phillips curve model, show the state of the Australian economy assuminghaving a stable target inflation of 2% prior to COVID-19. Now, in the same model, show andexplain the impact of the above-mentioned construction boom on employment andinflation levels in Australia resulting in the current state of the economy (2022- 2023).

The Phillips curve is an economic concept that proposes a negative correlation between the…

Using the AD and Phillips curve model, show the state of the Australian economy assuming having a stable target inflation of 2% prior to COVID-19. Now, in the same model, show and explain the impact of the above-mentioned construction boom on employment and inflation levels in Australia resulting in the current state of the economy (2022- 2023).

Using the AD and Phillips curve model, show the state of the Australian economy assuming having a stable target inflation of 2% prior to COVID-19. Now, in the same model, show and explain the impact of the above-mentioned construction boom on employment and inflation levels in Australia resulting in the current state of the economy (2022- 2023).

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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Consider an economy producing at Yo = 0 and ū = 1/4. The inflation rate at t = 0 is TO = 3%. Now, suppose the economy is hit by an inflation shock ō1 = ō2 = 3%. The shock is temporary and ōt = 0 for t > 2. For the duration of the inflation shock, the economy is in a recession with Y = Ý2 = -1%, which ends with Y3 = 0. Based on this information, you know that the inflation rate T3 is percent. 8.5 8.5 (with margin: 0)
As the Federal Reserve sharply raises rates in the face if substantial inflationary pressures, economists are trying to gauge the extent to which the U.S. labor market is slowing. First, how might you try to measure labor market slack? Second, across the business cycle, describe how the gap between whatever is true unemployment, and a notion of “full” employment generally relates to inflationary pressures. Finally, relate this gap to the economy’s overall ‘output gap’ (actual GDP vs. potential GDP).
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Need explanation how we got 11.5
The Phillips Curve is given as; n = T° + (m + z) – au Now, consider the case where the inflation expectations are de-anchored. Assume the expected inflation n° is based on last year's inflation rate t-1 (nº = Ttt-1) 1.1: Suppose Tt-1 = 3%. What would be the unemployment rate (U¿) when T = 4%? %3D 1.2: Suppose the production function is given by: Y = N = L(1 – uz) What happens to the potential output when the markup increases?
Q7 Answer part a only
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Q1 A) Illustrate the short-run and long-run impact of the Covid-19 pandemic (unexpected demand shock) to Thailand using both the AD-AS model and the Phillips curve. Assume the Thai economy starts at full employment. B) How would an adverse supply shock change the short-run tradeoff between inflation and unemployment? Illustrate your answer using a Phillips curve diagram.