Tradeoff between inflation and unemployment .

Question

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Answer 1

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 14, Problem 1P

To determine

Tradeoff between inflation and unemployment.

Expert Solution & Answer

Explanation of Solution

There is an inverse relation between unemployment and inflation. The Philips curve explains this inverse relationship or tradeoff between unemployment and inflation in an economy. The Philips curve will shift leftward, when there is an improved tradeoff between inflation and unemployment. The main reasons behind improved tradeoff between inflation and unemployment are, increased productivity, increasing efficiency in labor market, falling world prices and falling supply side factors. These factors might improve the tradeoff.

The main factors, which decrease the tradeoff between inflation and unemployment are, the decrease in productivity and the increases in resource prices.

Economics Concept Introduction

Unemployment: This is a situation of being unemployed.

Inflation: A rise in the general price level in an economy is called inflation.

Philips curve: Philips curve explains the inverse relationship between unemployment and inflation.

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Answer 2

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 14, Problem 1P

To determine

Tradeoff between inflation and unemployment.

Expert Solution & Answer

Explanation of Solution

There is an inverse relation between unemployment and inflation. The Philips curve explains this inverse relationship or tradeoff between unemployment and inflation in an economy. The Philips curve will shift leftward, when there is an improved tradeoff between inflation and unemployment. The main reasons behind improved tradeoff between inflation and unemployment are, increased productivity, increasing efficiency in labor market, falling world prices and falling supply side factors. These factors might improve the tradeoff.

The main factors, which decrease the tradeoff between inflation and unemployment are, the decrease in productivity and the increases in resource prices.

Economics Concept Introduction

Unemployment: This is a situation of being unemployed.

Inflation: A rise in the general price level in an economy is called inflation.

Philips curve: Philips curve explains the inverse relationship between unemployment and inflation.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 14, Problem 1P

To determine

Tradeoff between inflation and unemployment.

Expert Solution & Answer

Explanation of Solution

There is an inverse relation between unemployment and inflation. The Philips curve explains this inverse relationship or tradeoff between unemployment and inflation in an economy. The Philips curve will shift leftward, when there is an improved tradeoff between inflation and unemployment. The main reasons behind improved tradeoff between inflation and unemployment are, increased productivity, increasing efficiency in labor market, falling world prices and falling supply side factors. These factors might improve the tradeoff.

The main factors, which decrease the tradeoff between inflation and unemployment are, the decrease in productivity and the increases in resource prices.

Economics Concept Introduction

Unemployment: This is a situation of being unemployed.

Inflation: A rise in the general price level in an economy is called inflation.

Philips curve: Philips curve explains the inverse relationship between unemployment and inflation.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 14, Problem 1P

To determine

Tradeoff between inflation and unemployment.

Expert Solution & Answer

Explanation of Solution

There is an inverse relation between unemployment and inflation. The Philips curve explains this inverse relationship or tradeoff between unemployment and inflation in an economy. The Philips curve will shift leftward, when there is an improved tradeoff between inflation and unemployment. The main reasons behind improved tradeoff between inflation and unemployment are, increased productivity, increasing efficiency in labor market, falling world prices and falling supply side factors. These factors might improve the tradeoff.

The main factors, which decrease the tradeoff between inflation and unemployment are, the decrease in productivity and the increases in resource prices.

Economics Concept Introduction

Unemployment: This is a situation of being unemployed.

Inflation: A rise in the general price level in an economy is called inflation.

Philips curve: Philips curve explains the inverse relationship between unemployment and inflation.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 14, Problem 1P

To determine

Tradeoff between inflation and unemployment.

Expert Solution & Answer

Explanation of Solution

There is an inverse relation between unemployment and inflation. The Philips curve explains this inverse relationship or tradeoff between unemployment and inflation in an economy. The Philips curve will shift leftward, when there is an improved tradeoff between inflation and unemployment. The main reasons behind improved tradeoff between inflation and unemployment are, increased productivity, increasing efficiency in labor market, falling world prices and falling supply side factors. These factors might improve the tradeoff.

The main factors, which decrease the tradeoff between inflation and unemployment are, the decrease in productivity and the increases in resource prices.

Economics Concept Introduction

Unemployment: This is a situation of being unemployed.

Inflation: A rise in the general price level in an economy is called inflation.

Philips curve: Philips curve explains the inverse relationship between unemployment and inflation.

Answer 6

Chapter 14, Problem 1P

To determine

Tradeoff between inflation and unemployment.

Expert Solution & Answer

Explanation of Solution

There is an inverse relation between unemployment and inflation. The Philips curve explains this inverse relationship or tradeoff between unemployment and inflation in an economy. The Philips curve will shift leftward, when there is an improved tradeoff between inflation and unemployment. The main reasons behind improved tradeoff between inflation and unemployment are, increased productivity, increasing efficiency in labor market, falling world prices and falling supply side factors. These factors might improve the tradeoff.

The main factors, which decrease the tradeoff between inflation and unemployment are, the decrease in productivity and the increases in resource prices.

Economics Concept Introduction

Unemployment: This is a situation of being unemployed.

Inflation: A rise in the general price level in an economy is called inflation.

Philips curve: Philips curve explains the inverse relationship between unemployment and inflation.

Answer 7

Chapter 14, Problem 1P

To determine

Tradeoff between inflation and unemployment.

Answer 8

Expert Solution & Answer

Explanation of Solution

There is an inverse relation between unemployment and inflation. The Philips curve explains this inverse relationship or tradeoff between unemployment and inflation in an economy. The Philips curve will shift leftward, when there is an improved tradeoff between inflation and unemployment. The main reasons behind improved tradeoff between inflation and unemployment are, increased productivity, increasing efficiency in labor market, falling world prices and falling supply side factors. These factors might improve the tradeoff.

The main factors, which decrease the tradeoff between inflation and unemployment are, the decrease in productivity and the increases in resource prices.