Homework Answers
The correct option is A Phillips curve relationship of Beta<0.
This equation demonstrates Phillips curve relationship. Phillip curve descirbe an inverse relationship between inflation and unemployment.
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Question 8 1 pts Consider the equation, a +Blu-u) where:. is the rare of consumer price...
Consider the equation 1. = a +B(u.-ū) where: 7. is the rare of consumer price inflation,...
Consider the equation 1. = a +B(u.-ū) where: 7. is the rare of consumer price inflation, q, is the unemployment rate andū is the natural rate of unemployment. This equation represents: An Okun's law relationship if 2> B>0; An Okun's law relationship if -2 <B<0; An Okun's law relationship if -0.5 <B<0; O A Phillips curve relationship if B >0; O A Phillips curve relationship if 6 <0.
Consider an economy with a natural unemployment rate, u, of 4%. The expectations-augmented Philli...
Consider an economy with a natural unemployment rate, u, of 4%. The expectations-augmented Phillips curve is Assume that Okun's Law holds so that a 1 percentage point increase in the unemployment rate maintained for one year reduces GDP by 2% of full employment output. Note: Okun's Law can be expressed as: 2( u-u) a. Consider a two-year disinflation. In the first year actual inflation, π' is 14% and expected inflation, π.s 18%. What is the first year unemployment rate? %...
Question 11 1 pts The unemployment rate is 6% and the natural rate of unemployment is...
Question 11 1 pts The unemployment rate is 6% and the natural rate of unemployment is 3%. Potential output is $ 100. Using the slope coefficients for the Phillips Curve and/or for Okun's Law from the textbook, calculate actual output (in $)?
Suppose that the economy can be described by the following three equa- tions: Uz - Ut-1...
Suppose that the economy can be described by the following three equa- tions: Uz - Ut-1 = Tit - 74-1 = gut = -0.5(9yt - 3%) -5(44-6%) 7% - The Okun's law Phillips curve Aggregate demand (a) Reduce the three equations to two by substituting Gyt from the aggregate demand equation into Okun's law. What are the medium- run rates of unemployment and inflation in this economy? (3 points Assume that the economy is in a medium-run equilibrium in pe-...
2. Phillips Curve. An economy has the following functions for its short run aggregate supply (SRAS),...
2. Phillips Curve. An economy has the following functions for its short run aggregate supply (SRAS), Okun's Law (OL), and Phillips Curve (PC): SRAS: P = EP + (1/2)(y - 3) OL: (Y-Y) = -4(u-u") PC:T = ET - (1/5)( - 6) The economy begins at its natural rate of output with a stable price level equal to $5. a.) Output is at its natural level when the price level is equal to expectations. Calculate the natural rate of output...
The equation inflation rate = a - b*(change in GDP growth) where the change in GDP...
The equation inflation rate = a - b*(change in GDP growth) where the change in GDP growth is in percentage points and the inflation rate is in percent terms, describes an Okun's law relationship if None of the other answers is correct b=-0.5 b=2 b=0.5 b= -2 Consider a single-price monopolist facing a demand curve of P=60 - 2q, where Pis market price and qis quantity. The monopolist has a total cost curve TC=20q. What is the profit maximizing price...
8) Consider an economy in long-run equilibrium with an inflation rate () of 0.08 per year and a natural unemployment rate of 0.05. Suppose Okun's law holds and a one percentage point unemplo...
8) Consider an economy in long-run equilibrium with an inflation rate () of 0.08 per year and a natural unemployment rate of 0.05. Suppose Okun's law holds and a one percentage point unemployment rate reduces real output by 2% of full-employment output. The expectation-augmented Phillips curve is givep by increase in the т . ne . 2.5 (u-005). Consider a two distr maErTTelintyear,π .006 and me . 008. In the second year, π.004 and㎡. (a) In the first year, what...
3. Suppose that the Phillips curve is given by: It = TE + a - but,...
3. Suppose that the Phillips curve is given by: It = TE + a - but, where is the inflation rate, Ti is the expected inflation, ut is the rate of unemployment and, a and b are two positive parameters. Suppose that a fraction 1 € (0,1) of wage contracts are indexed to inflation and Ti = litt + (1 - 1) Tt-1. (a) Derive the new equation for the Phillips curve. [2 marks] (b) Derive an algebraic expression for...
Suppose that the Phillips curve is given by - = 0.1 - 2u where = -1 Suppose that inflation in year t - 1 is ze...
Suppose that the Phillips curve is given by - = 0.1 - 2u where = -1 Suppose that inflation in year t - 1 is zero. In year t, the central bank decides to keep the unemployment rate at 45 forever a. Compute the rate of inflation for years t, t + 1, t + 2, and t + 3. Now suppose that half the workers have indexed labor contracts so that = + (1 - A)-1 and 1 =...
i only need question 5, thanks 4. Suppose that the Phillips curve is given by TT,...
i
only need question 5, thanks
4. Suppose that the Phillips curve is given by TT, = 1 + 0.1 - 2u a. What is the natural rate of unemployment? Assume that expected inflation is given by m = (1 - 0) +010-1 And suppose that is initially equal to zero and it is given and does not change. It could be zero or any positive value. Suppose that the rate of unemployment is initially equal to the natural rate....
Consider the equation 1. = a +B(u.-ū) where: 7. is the rare of consumer price inflation, q, is the unemployment rate andū is the natural rate of unemployment. This equation represents: An Okun's law relationship if 2> B>0; An Okun's law relationship if -2 <B<0; An Okun's law relationship if -0.5 <B<0; O A Phillips curve relationship if B >0; O A Phillips curve relationship if 6 <0.
Consider an economy with a natural unemployment rate, u, of 4%. The expectations-augmented Phillips curve is Assume that Okun's Law holds so that a 1 percentage point increase in the unemployment rate maintained for one year reduces GDP by 2% of full employment output. Note: Okun's Law can be expressed as: 2( u-u) a. Consider a two-year disinflation. In the first year actual inflation, π' is 14% and expected inflation, π.s 18%. What is the first year unemployment rate? %...
Question 11 1 pts The unemployment rate is 6% and the natural rate of unemployment is 3%. Potential output is $ 100. Using the slope coefficients for the Phillips Curve and/or for Okun's Law from the textbook, calculate actual output (in $)?
Suppose that the economy can be described by the following three equa- tions: Uz - Ut-1 = Tit - 74-1 = gut = -0.5(9yt - 3%) -5(44-6%) 7% - The Okun's law Phillips curve Aggregate demand (a) Reduce the three equations to two by substituting Gyt from the aggregate demand equation into Okun's law. What are the medium- run rates of unemployment and inflation in this economy? (3 points Assume that the economy is in a medium-run equilibrium in pe-...
2. Phillips Curve. An economy has the following functions for its short run aggregate supply (SRAS), Okun's Law (OL), and Phillips Curve (PC): SRAS: P = EP + (1/2)(y - 3) OL: (Y-Y) = -4(u-u") PC:T = ET - (1/5)( - 6) The economy begins at its natural rate of output with a stable price level equal to $5. a.) Output is at its natural level when the price level is equal to expectations. Calculate the natural rate of output...
The equation inflation rate = a - b*(change in GDP growth) where the change in GDP growth is in percentage points and the inflation rate is in percent terms, describes an Okun's law relationship if None of the other answers is correct b=-0.5 b=2 b=0.5 b= -2 Consider a single-price monopolist facing a demand curve of P=60 - 2q, where Pis market price and qis quantity. The monopolist has a total cost curve TC=20q. What is the profit maximizing price...
8) Consider an economy in long-run equilibrium with an inflation rate () of 0.08 per year and a natural unemployment rate of 0.05. Suppose Okun's law holds and a one percentage point unemployment rate reduces real output by 2% of full-employment output. The expectation-augmented Phillips curve is givep by increase in the т . ne . 2.5 (u-005). Consider a two distr maErTTelintyear,π .006 and me . 008. In the second year, π.004 and㎡. (a) In the first year, what...
3. Suppose that the Phillips curve is given by: It = TE + a - but, where is the inflation rate, Ti is the expected inflation, ut is the rate of unemployment and, a and b are two positive parameters. Suppose that a fraction 1 € (0,1) of wage contracts are indexed to inflation and Ti = litt + (1 - 1) Tt-1. (a) Derive the new equation for the Phillips curve. [2 marks] (b) Derive an algebraic expression for...
Suppose that the Phillips curve is given by - = 0.1 - 2u where = -1 Suppose that inflation in year t - 1 is zero. In year t, the central bank decides to keep the unemployment rate at 45 forever a. Compute the rate of inflation for years t, t + 1, t + 2, and t + 3. Now suppose that half the workers have indexed labor contracts so that = + (1 - A)-1 and 1 =...
i
only need question 5, thanks
4. Suppose that the Phillips curve is given by TT, = 1 + 0.1 - 2u a. What is the natural rate of unemployment? Assume that expected inflation is given by m = (1 - 0) +010-1 And suppose that is initially equal to zero and it is given and does not change. It could be zero or any positive value. Suppose that the rate of unemployment is initially equal to the natural rate....
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