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- Which of the following statements most accurately describes the relationship between inflation and unemployment in the United States during this time period? The short-run Phillips curve remained stable. The short-run Phillips curve shifted to the left after actual inflation was lower than expected. The short-run Phillips curve shifted to the right after actual inflation was higher than expected.Overstimulating the economy: Suppose the economy today is producing output at its potential level and the inflation rate is equal to its long-run level, with π = 2%. What happens if policymakers try to stimulate the economy to keep output above potential by 3% every year? How does your answer depend on the slope of the Phillips curve?Consider the original presentation of the Phillips Curve, with inflation on the vertical axis and unemployment on the horizontal axis. Which of the following could NOT shift this Phillips Curve upward? an increase in the price of inputs used in production expected higher prices in the future/higher inflation an increase in the average wages of workers an improvement in production technology
- 1. Aggregate demand, aggregate supply, and the Phillips curve In the year 2027, aggregate demand and aggregate supply in the imaginary country of Aso-Kuju are represented by the curves AD2027 and AS on the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand curve is given by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by the curve labeled ADB, resulting in the outcome given by point B. PRICE LEVEL 108 107 106 105 104 103 102 101 100 0 AD 2027 2 4 B AS ADB ADA 8 10 6 OUTPUT (Trillions of dollars) 12 14 16 (?) Suppose the unemployment rate is 7% under one of these two outcomes and 5% under the other. Based on the previous graph, you would expect outcome B▼ to be associated with the lower unemployment rate (5%). If aggregate demand is high in 2028, and the economy is at outcome B, the inflation rate between 2027 and 2028…In the year 2020, aggregate demand and aggregate supply in the fictional country of Drooble are represented by the curves AD2020 and AS on the following graph. The price level is 102. The graph also shows two possible outcomes for 2021. The first potential aggregate demand curve is given by the ADA curve, resulting in the outcome illustrated by point A. The second potential aggregate demand curve is given by the ADB curve, resulting in the outcome illustrated by point B. PRICE LEVEL 108 107 B 106 105 104 103 AD 2020 102 101 100 0 2 4 6 8 A 10 OUTPUT (Trillions of dollars) AS AD A ADB 12 14 16 ? Suppose the unemployment rate is 5% under one of these two outcomes and 2% under the other. Based on the previous graph, you would expect to be associated with the higher unemployment rate (5%). If aggregate demand is low in 2021, and the economy is at outcome A, the inflation rate between 2020 and 2021 isThe Short-Run Phillips Curve given by T = E (x) – 0.4 (u – 10) + v Suppose that the economy has adaptive expectations and no inflation shocks. If inflation goes down by 3.3 percentage points a year from today, what is the unemployment rate one year from now? Round your answer to the nearest two decimal place. Write your answer in percentage terms so if your answer is 10%, write 10.
- The graph shows Iran's short-run Phillips curve and long-run Phillips curve when the natural unemployment rate is 10 percent and the expected inflation rate is 12 percent a year. Draw a point to show the current unemployment rate and inflation rate according to the news clip. Suppose Iran removes the subsidies and consumers don't know what the higher prices will be. Illustrate the most likely path of unemployment and inflation. Draw either an arrow along the SRPC showing the direction of change, or a new SRPC. Label it 1. Suppose instead that Iran removes the subsidies and announces the new prices so that consumers know what they are. Illustrate the most likely path of inflation and unemployment. Draw either an arrow along the SRPC showing the direction of change, or a new SRPC Label it 2. ILSSecond wave of Coronavirus infection has a potential effect on GDP growth. The government tries to use monetary policy to alleviate the problem. Use the Keynesian’s short-run and long-run Phillips curves to explain whether an expansionary monetary policy can lower the natural rate of unemployment temporarily or permanently. Also, draw three graphs: the labor market, AD-AS, and Phillips curve diagramWhat is Phillips curve How does it explain inflation?
- The Phillips curve illustrates a trade-off between * Equity and efficiency Supply and demand Unemployment rate and inflation rate Unemployment rate and interest rateWhich of the following is true about the Phillips curve? The empirical relationship between unemployment and inflation in the US disappeared after the 1970s. This means that the theoretical Phillips curve does not represent the world well. For a researcher to identify the theoretical Phillips curve from empirical data, the economy must be subject to supply shocks. The empirical Phillips curve implies that a government must choose between either low unemployment and high inflation or high unemployment and low inflation. When inflation expectations adjust, the negative empirical correlation between inflation and unemployment might disappear.The economy is characterized by the data: the actual unemployment rate is 3.6%, the natural unemployment rate is 5.4%, the inflation rate is expected to be 4%, the inflation response rate to the unemployment rate is 0.5. Using the Phillips curve equation, calculate the actual inflation rates. If the expected inflation rate rises to 7%, what will be the magnitude of cyclical unemployment?
