Assume that in response to the Corona crisis, Portugal experiences a decrease in output of 1% and it is associated with a rise in the unemployment rate of 2 percentage points. What is the Okun'scoefficient?O a. 0.4O b. -2.0Oc.-0.4O d. 2.0Which statement is true: When the short term interest rate in the Euro area is at zero percent,O a. the ECB, according to its mandate, cannot further reduce the policy rateO b.the ECB can stimulate the economy by lending directly to the government.the ECB can buy assets to reduce long term interest rates.O d.the ECB can steepen the Phillips curve by reducing the bargaining gap.Markup,nitial euilbriummarkupProfit-maximizirg mark-up210Number of firms, aEquilibrium numberof firmsFigure: Equilibrium mark-ups () and the number of firms in the market (n)Consider the situation in the figure. Assume that there are no barriers to market entry, no subsidies, and the current mark-up a is lower than the initial equilibrium mark-up in A. Think, for instance, about asituation in which cost of production increased and the mark-up declined. What needs to happen so that a new equilibrium is reached?O a. New firms enter the market, which increases the mark-up for those firms that remain active.O b. The economy cannot get to a new equilibrium.Oc.Firms exit the market, which increases the mark-up for those firms that remain active.O d. New firms enter the market, which lowers the mark-up for those fims that remain active.

Okun's law is the law which defines the relationship between output growth and unemployment. It says…

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Question

Assume that in response to the Corona crisis, Portugal experiences a decrease in output of 1% and it is associated with a rise in the unemployment rate of 2 percentage points. What is the Okun's
coefficient?
O a. 0.4
O b. -2.0
Oc.
-0.4
O d. 2.0
Which statement is true: When the short term interest rate in the Euro area is at zero percent,
O a. the ECB, according to its mandate, cannot further reduce the policy rate
O b.
the ECB can stimulate the economy by lending directly to the government.
the ECB can buy assets to reduce long term interest rates.
O d.
the ECB can steepen the Phillips curve by reducing the bargaining gap.
Markup,
nitial euilbrium
markup
Profit-maximizirg mark-up
210
Number of firms, a
Equilibrium number
of firms
Figure: Equilibrium mark-ups () and the number of firms in the market (n)
Consider the situation in the figure. Assume that there are no barriers to market entry, no subsidies, and the current mark-up a is lower than the initial equilibrium mark-up in A. Think, for instance, about a
situation in which cost of production increased and the mark-up declined. What needs to happen so that a new equilibrium is reached?
O a. New firms enter the market, which increases the mark-up for those firms that remain active.
O b. The economy cannot get to a new equilibrium.
Oc.
Firms exit the market, which increases the mark-up for those firms that remain active.
O d. New firms enter the market, which lowers the mark-up for those fims that remain active.

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