WS, Real wage (W/P) PS, Output Inflation |VPC, VPC, Output Figure 11 Shift to the right of the VPC Figure 11 shows the Vertical Phillips Curve, VPC,, determined by the intersection of the wage-setting and price-setting curves, WSo and PSo. The Vertical Phillips Curve then shifts to the right to VPC,. Which one of the following explains this shift? (Hint: you may find it helpful to consider how the events below could affect the WS and PS curves) Select one: A: Oil prices rise as new sanctions are imposed on Iranian oil exports. B: A South African strike wave leads to higher worldwide coal prices C: New computer technology reduces warehouse costs. D: After new laws reduce worker rights, trade union membership soars. 1.

WS, Real wage (W/P) PS, Output Inflation |VPC, VPC, Output Figure 11 Shift to the right of the VPC Figure 11 shows the Vertical Phillips Curve, VPC,, determined by the intersection of the wage-setting and price-setting curves, WSo and PSo. The Vertical Phillips Curve then shifts to the right to VPC,. Which one of the following explains this shift? (Hint: you may find it helpful to consider how the events below could affect the WS and PS curves) Select one: A: Oil prices rise as new sanctions are imposed on Iranian oil exports. B: A South African strike wave leads to higher worldwide coal prices C: New computer technology reduces warehouse costs. D: After new laws reduce worker rights, trade union membership soars. 1.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Each point on a Phillips curve is a different combination of: O the interest rate and investment. inflation and unemployment. O saving and disposable income. O price and quantity.
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A government is considering introducing a new trade policy that would rescind existing free trade agreements and impose import tariffs. -what effect would this have on natural unemployment rate -whould this shift the phillips curve up or down?
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Consider a version of the Phillips curve where a proportion of wages, 1 >> 0, are now indexed to the rate of inflation. In these labor contracts, nominal wages move one-for-one with the actual price level. The remaining proportion of wages, (1-2), are set on the basis of expected inflation: nt λnt (1) et+ (m+z)-aut (2) a. Suppose that лet=πt-1. Solve for the natural rate of unemployment (the rate such that t=t-1). Is the natural rate of unemployment different as a result of wage indexation? b. Re-write the Phillips curve in terms of the difference between чt and un using the value for un you calculated in (a). How does wage indexation impact the way changes in inflation respond to deviations of the unemployment rate from the natural rate? What is the intuition for this result?
answer only part d , e and f
According to the St. Louis Federal Reserve the natural unemployment rate is 4.44 percent (Q2 2022 B) and the U.S. Bureau of Labor Statistics (BLS) estimates the U.S. unemployment rate (U3, March 2022 ) to be 3.6 percent. If you expect unemployment to continue to fall the short-run Phillips curve would predict: O A decrease in the inflation rate. An increase in the inflation rate. A decrease in the unemployment rate. An increase in the unemployment rate.
Why does this mean? "the natural rate of unemployment" and also can elaborate more on why the longrun philips curve is vertical at the rate? why inflation is also constant in longrun equillibrium?
2. Analyze the effects of the following developments on both the short-run and the long-run Phillips curves. Use the graphs and explain in detail: a) a rise in the natural rate of unemployment b) a substantial increase in the price of energy
QUESTIONS Which of the following can create demand-pull inflation? O Excessive aggregate spending supply disruptions caused by global pandemics and regional wars O Sharply rising oil prices Higher labor costs Recessions and depressions
. Explain how the original Phillips curve was transformed into the expectations augmented Phillips curve. Using the latter, describe why any expansionary policy would not be effective in the long run and move the macro-economy back to the Natural Rate of Unemployment (NRU).
The long-run Phillips Curve describes: The relationship between unemployment and inflation after expectations of inflation have had time to adjust to experience. O An increase in expected inflation will cause nominal wages to rise, shifting both SRAS and the Phillips Curve up. That there is a predictable negative relationship between the output gap and the unemployment rate but it is not one to one. The negative short-run relationship between the unemployment rate and the inflation rate.