Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 31, Problem 9SPPA
To determine
To illustrate:
The short-run and long-run Phillips curves if the expected inflation rate changes and the natural
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Inflation at lowest rate in 5 years
Inflation rate (percent per year)
In September, inflation in the United Kingdom fell to 1.1% a year, its lowest in 5
years. Analysts expected an inflation rate of 1.3% a year.
1.7-
Source: The New York Times, October 13, 2009
With the unemployment rate at 8 percent and the natural unemployment rate at 6
percent, sketch the short-run Phillips curve and mark on your graph the point which
shows the situation in September. Label the point A.
1.5-
1.3-
The unemployment rate is 8 percent and the natural unemployment rate is 6
percent.
1.1-
Draw a point that shows the unemployment rate and the inflation rate in
September. Label it A.
Draw a point that shows the natural unemployment rate and the expected inflation
0.9
rate. Label it B.
10
12
Unemployment rate (percent of labor force)
Draw the short-run Phillips curve that is consistent with these data. Label it.
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1. Assume that in an economy the phillips curve is:
At = -0,8 (U-Un) + p
Last year's inflation was 0,08, current inflation is 0,08, unemployment rate is 0,04 and the price shock is 0,01. What is the
natural rate of unemployment?
2. The price level is 143, the inflation rate is 0,08, the nominal money supply is 12785, the nominal interest rate is 0,13 percent.
Calculate the seignorage.
I need help soon as possible can you add full steps please.
Chapter 31 Solutions
Foundations of Economics (8th Edition)
Ch. 31 - Prob. 1SPPACh. 31 - Prob. 2SPPACh. 31 - Prob. 3SPPACh. 31 - Prob. 4SPPACh. 31 - Prob. 5SPPACh. 31 - Prob. 6SPPACh. 31 - Prob. 7SPPACh. 31 - Prob. 8SPPACh. 31 - Prob. 9SPPACh. 31 - Prob. 10SPPA
Ch. 31 - Prob. 11SPPACh. 31 - Prob. 1IAPACh. 31 - Prob. 2IAPACh. 31 - Prob. 3IAPACh. 31 - Prob. 4IAPACh. 31 - Prob. 5IAPACh. 31 - Prob. 6IAPACh. 31 - Prob. 7IAPACh. 31 - Prob. 8IAPACh. 31 - Prob. 9IAPACh. 31 - Prob. 10IAPACh. 31 - Prob. 1MCQCh. 31 - Prob. 2MCQCh. 31 - Prob. 3MCQCh. 31 - Prob. 4MCQCh. 31 - Prob. 5MCQCh. 31 - Prob. 6MCQ
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- INFLATION RATE (Percent) 1 2 5. Expectations and the Phillips curve The following graph shows an economy in long-run equilibrium at point A (grey star symbol). The vertical line is the long-run Phillips curve (LRPC). The downward-sloping curve labeled SRPC is the short-run Phillips curve passing through point A. SRPC LRPC 0 0 1 2 3 4 5 6 7 8 UNEMPLOYMENT RATE (Percent) Which of the following is true along SRPC? O The expected inflation rate is 5%. The natural rate of unemployment is 3%. The actual unemployment rate is 6%. • } - * SRPC2 ㄢ C (?) Suppose that the Fed suddenly and unexpectedly decreases the money supply in an effort to reduce inflation. As a result of this unanticipated action, actual inflation falls to 3%. On the previous graph, use the black point (plus symbol) to illustrate the short-run effects of this policy. Now, suppose that-after a period of 3% inflation-households and firms begin to expect that the inflation rate will continue to be 3%. On the previous graph, use…arrow_forwardNeed help with this. Thanks!arrow_forwardHi I need the answer to this question thank youarrow_forward
- The inflation rate is 6 percent a year, the unemployment rate is 4 percent, and the economy is at full employment. Draw the long-run Phillips curve. Label it LRPC. Draw the short-run Phillips curve. Label it SRPC. The Fed announces that it intends to slow the money growth rate to keep the inflation rate at 3 percent a year for the foreseeable future. People believe the Fed. Draw an arrow along a curve to show the change in the inflation rate and the unemployment rate in the short run and in the long run. 1 10- 8- 6 4- 2- Inflation rate (percent per year) Garrow_forwardI need help soon as possiblearrow_forwardQuestion 18 Suppose the economy currently has an inflation rate of 7%. Moreover, the slope of the economy's Phillips Curve is 1/2. Over the next 3 years, short-run output is +4 percent, O percent, and -2 percent. Based on this information you know that the inflation rate at the end of the third year is percent.arrow_forward
- I'd like help on first 3 subsectionsarrow_forwardThe following graph shows a short-run Phillips curve for a hypothetical economy. Show the short-run effect of a contractionary monetary policy by dragging the point along the short-run Phillips curve (SRPC) or shifting the curve to the appropriate position. 12 SRPC 6:31 F 4/29/202 INFLATION RATE (Percent) 11 10 9 8 3 H CHIII I SRPC а J H a Iarrow_forwardThe Phillips curve is A. a positive relationship between price stability and constant, small-increment changes in the fiscal policy on the part of the Fed. B. a positive relationship in the long run between the rate of inflation and the rate of unemployment. C. a negative relationship between the inflation rate and the unemployment rate, at least in the short run. D. a positive relationship between the unemployment rate and the real Gross Domestic Product (GDP) level.arrow_forward
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