what happens to inflation when θ=0 and unemployment is kept below the natural rate of unemployment?
what happens to inflation when θ=0 and unemployment is kept below the natural rate of unemployment?
Homework Answers
Phlilips curve describes the negative relation between
unemployment rate and the inflation rate. In the equation below un
is the natural employment rate that always prevail in the economy
due to constant adjustment in the market. when θ=0 and unemployment
is kept below the natural rate of unemployment, the rate of
inflation rises in the market. 
Add Answer to:
what happens to inflation when θ=0 and unemployment is kept
below the natural rate of unemployment?
So let's say that this European Central Bank, the European Central Bank expects the natural unemployment rate to be 6 percent, and the actual unemployment rate is 5.5 percent. A.) Use the Phillips curve illustration to determine what happens to inflation
So let's say that this European Central Bank, the European Central Bank expects the natural unemployment rate to be 6 percent, and the actual unemployment rate is 5.5 percent.A.) Use the Phillips curve illustration to determine what happens to inflation and unemployment over a long period of time.B.) Assuming the expectation is the actual natural unemployment rate (5.5%), then if the government decides to increase government spending, please briefly explain and use the Phillips curve to illustrate.
If the actual unemployment rate is below the natural rate of unemployment, it would be expected...
If the actual unemployment rate is below the natural rate of unemployment, it would be expected that: Group of answer choices the natural rate of unemployment would fall the Phillips curve would shift to the left the rate of inflation would increase wages would fall
An economy has the natural rate of unemployment equal to 8.3%. The inflation rate in the...
An economy has the natural rate of unemployment equal to 8.3%. The inflation rate in the previous period was 8.3%. If there is no cyclical unemployment and the country has adaptive expectations, what is the difference (in percentage points) between the inflation rate and the expected inflation rate?
I thought the increase in θ will cause the increasing expected inflation rate, which will increase...
I thought the increase in θ will cause the
increasing expected inflation rate, which will increase the change
in inflation. Because of the negative relation between change in
inflation and u-ut, I think it will finally cause ut increase. Is
that correct?
14) Assume that expected inflation is based on the following: net = Ont-1. An increase in 0 will cause A) an increase in the natural rate of unemployment. B) a reduction in the natural rate of unemployment. C)...
3. Discuss the relationship between the natural rate of unemployment, Un, and the Phillips curve, 1lt...
3. Discuss the relationship between the natural rate of unemployment, Un, and the Phillips curve, 1lt – itt-1 = -a(ut – Un); and explain why the natural rate of unemployment is also known as the non-accelerating inflation rate of unemployment (NAIRU). Hints: The central assumption used to derive the Phillips curve, Tet – 1lt-1 = -a(Ut – Un), was that tę = Tt-1, where tę represents expected inflation. What does this mean? Assume that Ut = Un. What happens to...
Suppose that the economy is experiencing a high level of inflation rate and unemployment is below...
Suppose that the economy is experiencing a high level of inflation rate and unemployment is below the natural rate. How does the economy return to the natural rate of unemployment if this higher inflation rate persists?
Consider an economy in which the unemployment rate is at the natural level and the inflation...
Consider an economy in which the unemployment rate is at the natural level and the inflation rate is 10%. Suppose that the domestic central bank wants to reduce inflation to 5%. Starting from year t the central bank reduces the money supply in such a way that unemployment remains above the natural level by one percent each year. After 5 years the inflation reaches the new target of 5%. Compute the sacrifice ratio of this policy. What is the slope...
When the output gap is negative, the actual unemployment rate is: O below the natural rate. O equal to the natural...
When the output gap is negative, the actual unemployment rate is: O below the natural rate. O equal to the natural rate. Oabove the natural rate. The actual and natural unemployment rates are not related to the output gap.
If an economy is operating at the natural rate of unemployment, it is OA) experiencing inflation....
If an economy is operating at the natural rate of unemployment, it is OA) experiencing inflation. B) in a recession. OC) producing at its full employment real GDP. D) in an expansion.
What happened to the inflation rate between the year when the unemployment rate was 5.5% and...
What happened to the inflation rate between the year when the
unemployment rate was 5.5% and the year when it was 4.5%?
The inflation rate decreased by 2 percentage points.
The inflation rate decreased from 1.9% to 1.5%.
The inflation rate increased by 0.5 percentage points.
The inflation rate increased from 4% to 5%.
The points on the graph represent observations along the U.S.
economy’s Phillips curve during the 1960s. If the inflation rate
had been 4% during the 1960s,...
I thought the increase in θ will cause the
increasing expected inflation rate, which will increase the change
in inflation. Because of the negative relation between change in
inflation and u-ut, I think it will finally cause ut increase. Is
that correct?
14) Assume that expected inflation is based on the following: net = Ont-1. An increase in 0 will cause A) an increase in the natural rate of unemployment. B) a reduction in the natural rate of unemployment. C)...
3. Discuss the relationship between the natural rate of unemployment, Un, and the Phillips curve, 1lt – itt-1 = -a(ut – Un); and explain why the natural rate of unemployment is also known as the non-accelerating inflation rate of unemployment (NAIRU). Hints: The central assumption used to derive the Phillips curve, Tet – 1lt-1 = -a(Ut – Un), was that tę = Tt-1, where tę represents expected inflation. What does this mean? Assume that Ut = Un. What happens to...
When the output gap is negative, the actual unemployment rate is: O below the natural rate. O equal to the natural rate. Oabove the natural rate. The actual and natural unemployment rates are not related to the output gap.
If an economy is operating at the natural rate of unemployment, it is OA) experiencing inflation. B) in a recession. OC) producing at its full employment real GDP. D) in an expansion.
What happened to the inflation rate between the year when the
unemployment rate was 5.5% and the year when it was 4.5%?
The inflation rate decreased by 2 percentage points.
The inflation rate decreased from 1.9% to 1.5%.
The inflation rate increased by 0.5 percentage points.
The inflation rate increased from 4% to 5%.
The points on the graph represent observations along the U.S.
economy’s Phillips curve during the 1960s. If the inflation rate
had been 4% during the 1960s,...
Most questions answered within 3 hours.
-
From past history, the scores on a statistics test are normally
distributed with a mean of...
asked 1 minute ago -
Calculate the gravitational field strength on the highest peak
of Everest (8848 m above the Earth).
asked 1 minute ago -
the energy value of carbohydrates is 4.0 cal/g. calculate the
energy in 250 g of carbohydrates,...
asked 4 minutes ago -
i
need the summary of this article “Why I Don’t Trust The Video Games
Cause Violence”...
asked 22 minutes ago -
Draw the reactants and products of the following
reaction:
3-ethyl-2-heptene + HOH → 3-ethyl-3-heptanol +
3-ethyl-2-heptanol...
asked 20 minutes ago -
Determine the ratio of adipic acid and butylene glycol that
should be used to obtain a...
asked 29 minutes ago -
Calculate the ratio of the resistance of 11.0 m of aluminum wire
2.5 mm in diameter,...
asked 23 minutes ago -
Kinkaid Co. is incorporated at the beginning of this year and
engages in a number of...
asked 27 minutes ago -
when setting up a simple pendulum, calculate the string length
required for the period to equal...
asked 45 minutes ago -
: A small but very close dense mass of 389 kg is brought close
to a...
asked 46 minutes ago -
Create a class called Hotel. The hotel class will track the
current reservations for your one-room...
asked 1 hour ago -
In space, a 4.0 kg metal ball moving 30 m/s has a head on
collision with...
asked 1 hour ago