In the Barro-Gordon model, what inflation rate would the central bank choose if its most -preferred...

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In the Barro-Gordon model, what inflation rate would the central bank choose if its most -preferred...

In the Barro-Gordon model, what inflation rate would the central bank choose if its most -preferred unemployment rate were equal to the natural rate?

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Answer 1

Answer #1

Generally the government seeks to achieve the Unemployment rate below the natural rate of unemployment. It pushes up the inflation rate.

If unemployment rate is equal to the natural rate, the actual inflation rate will be equal to the natural rate of unemployment rate.

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Answer 2

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In the Barro-Gordon model, what inflation rate would the central bank choose if its most -preferred...

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In the Barro-Gordon model, what inflation rate would the central bank choose if its most -preferred...

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In the Barro-Gordon model, what inflation rate would the central bank choose if its most -preferred...