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?
Homework Answers
When the country has adaptive expectations, then the expectation about next year's inflation rate are based on the inflation rate in this period. Thus, in case of adaptive expectations, expected inflation rate is equal to actual inflation rate which is equal to 8.3 per cent. The difference between the inflation rate and the expected inflation rate is equal to zero in this case.
Add Answer to:
An economy has the natural rate of unemployment equal to 8.3%.
The inflation rate in the...
You are given that the economy has a natural rate of unemployment of 3.3%. Let inflation...
You are given that the economy has a natural rate of unemployment of 3.3%. Let inflation change by -0.3 percentage points. Assuming a slope of 1/3, use the Phillips Curve and Okun's Law to fine the corresponding unemployment rate. Note: find short run output first, then the unemployment rate. Do not type the "%" sign, and round to two decimal places. Example: .0815 = 8.15% should be entered as 8.15
If the natural rate of unemployment is 4.0% and the economy has a 7.0% rate of...
If the natural rate of unemployment is 4.0% and the economy has a 7.0% rate of unemployment, then what is the cyclical rate of unemployment? O A. 4.0 percent O B. 3.0 percent O c. 11.0 percent. OD. Cannot be determined.
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 actual unemployment rate is equal to the natural rate of unemployment that implies that...
when the actual unemployment rate is equal to the natural rate of unemployment that implies that there is no cyclical unemployment. true or false?
All else equal, how will increasing unemployment insurance affect the natural rate of unemployment? The natural...
All else equal, how will increasing unemployment insurance affect the natural rate of unemployment? The natural rate of unemployment is likely to decrease. The natural rate of unemployment will remain unaffected. The natural rate of unemployment is likely to increase. From the following examples, select the example illustrating frictional unemployment. Winny is annoyed with her manager at the Tasty Freeze where she has worked all summer. She decides one day just to not go to work anymore and instead goes...
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.
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? %...
Without cyclical unemployment in the country, which isn’t true? Economy is at max employment level The...
Without cyclical unemployment in the country, which isn’t true? Economy is at max employment level The unemployment rate = 0% economy ‘s unemployment rate is at what we consider its natural rate Inflation rate with CPI shows: % change in the price level from one period to another period Real variables Average price level in one time period The value of intermediate goods is calculated in GDP by: Their value is not counted separately, but included as part of the...
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?
Decoding 'Natural' Rate of Unemployment Unemployment is a normal feature of our economy and the Congressional...
Decoding 'Natural' Rate of Unemployment Unemployment is a normal feature of our economy and the Congressional Budget Office believes the "natural" unemployment rate increased from 5 percent in 2007 to 6 percent in 2012. Source: Wall Street Journal, September 7, 2012 Provide some reasons why the natural unemployment rate might have increased. The natural unemployment rate might have increased because of _______. A. an increase in the minimum wage and an increase in the number of firms paying an efficiency...
If the natural rate of unemployment is 4.0% and the economy has a 7.0% rate of unemployment, then what is the cyclical rate of unemployment? O A. 4.0 percent O B. 3.0 percent O c. 11.0 percent. OD. Cannot be determined.
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.
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? %...
Most questions answered within 3 hours.
-
The Yankee's have a contract with their newly hired manager that
requires a lump sum payment...
asked 6 minutes ago -
A travelling salesman sells milkshake mixing machines and on
average sells 8.9 machines per month. He...
asked 11 minutes ago -
what's the danger in the fact that the market value of a stock
is based on...
asked 25 minutes ago -
Describe how do you feel about the post below and
why?
Listening to the podcast reaffirmed...
asked 34 minutes ago -
To start an avalanche on a mountain slope, an artillery shell is
fired with an initial...
asked 47 minutes ago -
The population of bacteria in a culture can be modeled by P left
parenthesis t right...
asked 51 minutes ago -
Which factors can prevent permanent fixation of an allele (i.e.
maintain genetic diversity)? Hint: You're going...
asked 54 minutes ago -
Compare a two-year bond with two successive one-year bonds in a
situation in which an investor...
asked 1 hour ago -
Chapter 6
Search the internet and find a newspaper example of a price
ceiling, price floor...
asked 1 hour ago -
Sarah Bates, calendar year taxpayer, started a new business on
October 8th. A number of start-up...
asked 1 hour ago -
You and your friends are playing in the swimming pool with a
40-cm-diameter beach ball. How...
asked 1 hour ago -
Patterson Development sometimes sells property on an installment
basis. In those cases, Patterson reports income in...
asked 1 hour ago