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![c) chain uy of equation: -4[-TH-1 24-1-1.55] -2 [ur 4°70 fort=1, 2, 3 Utol -4 gyt gmx gyrtat The table in below given t net u](http://img.homeworklib.com/questions/dcf7cda0-02ca-11eb-ad4b-d166e35a7cda.png?x-oss-process=image/resize,w_560)
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4)- Suppose for a given economy, the Phillips Curve is given by itthen 0.25 ut +...
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...
(18 marks) Suppose that the Phillips curve is given by: TT. = + 0.2 – 5ugs...
(18 marks) Suppose that the Phillips curve is given by: TT. = + 0.2 – 5ugs with people’s expectation of inflation governed by: T = 11-14 At time t = 0, it is known that the economy is in a medium run equilibrium with inflation rate of 3%. a. Find the natural rate of unemployment for this economy. (3 marks) b. If starting t = 1, the government decided to keep unemployment rate permanently at 3%. Find the expected inflation...
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 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-...
Suppose that Phillips curve for an economy is given by πt = πe t + 0.12−3.ut...
Suppose that Phillips curve for an economy is given by πt = πe t + 0.12−3.ut and in the year 2010 the unemployment rate in this economy is at its natural level but inflation is 20%. The unemployment rate is at its natural level and the inflation expectations are formed according to πe t = πt−1. The central bank wants to reduce the inflation rate to 2%, but it does not want unemployment to increase by more than two percentage...
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....
Problem 3.(36 points) Suppose the natural rate of unemployment equals 5%, and the Phillips curve is given by πt = πte −...
Problem 3.(36 points) Suppose the natural rate of unemployment equals 5%, and the Phillips curve is given by πt = πte − 0.25(ut − u∗t ). Suppose originally the economy is in the long run equilibrium, in which πte = 4%. 1. Determine unemployment and inflation rates corresponding to the original equilibrium. 2. Draw the Philips curve diagram with SRPC and LRPC. Mark the original long run equilibrium. 3. Suppose now the central bank performs a monetary expansion and raises...
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 =...
1. Inflation and unemployment. Suppose that the Phillips curve is given by: TI= +0.1 - 2ut...
1. Inflation and unemployment. Suppose that the Phillips curve is given by: TI= +0.1 - 2ut where = 077-1. Also, suppose that is initially equal to zero. (a) What is the natural rate of unemployment? Suppose that the rate of unemployment is initially equal to the natural rate. In year t, the authorities decide to bring the unemployment rate down to 3% and hold it there forever. (b) Determine the rate of inflation in years t, t+1, t +2, +...
4. (2.5 PTS) Assume the following Phillips curve: where π is the inflation rate, π et...
4. (2.5 PTS) Assume the following Phillips curve: where π is the inflation rate, π et is the expected inflation rate, ut the unemployment rate, un the natural rate of unemployment. The rule of expectations is π e.-π t-1 The economy is initially (t-0) in medium term equilibrium, with the unemployment rate equal to 10% and the inflation rate equal to 8%. a) Suppose the monetary authority decides to lower the inflation rate to 2%. It faces two options: i)...
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...
(18 marks) Suppose that the Phillips curve is given by: TT. = + 0.2 – 5ugs with people’s expectation of inflation governed by: T = 11-14 At time t = 0, it is known that the economy is in a medium run equilibrium with inflation rate of 3%. a. Find the natural rate of unemployment for this economy. (3 marks) b. If starting t = 1, the government decided to keep unemployment rate permanently at 3%. Find the expected inflation...
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 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-...
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....
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 =...
1. Inflation and unemployment. Suppose that the Phillips curve is given by: TI= +0.1 - 2ut where = 077-1. Also, suppose that is initially equal to zero. (a) What is the natural rate of unemployment? Suppose that the rate of unemployment is initially equal to the natural rate. In year t, the authorities decide to bring the unemployment rate down to 3% and hold it there forever. (b) Determine the rate of inflation in years t, t+1, t +2, +...
4. (2.5 PTS) Assume the following Phillips curve: where π is the inflation rate, π et is the expected inflation rate, ut the unemployment rate, un the natural rate of unemployment. The rule of expectations is π e.-π t-1 The economy is initially (t-0) in medium term equilibrium, with the unemployment rate equal to 10% and the inflation rate equal to 8%. a) Suppose the monetary authority decides to lower the inflation rate to 2%. It faces two options: i)...
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