4. The text notes that changes in oil prices can affect the inflation-unemployment outcome. Explain what effect changes in oil prices may have on these two variables. (with graph)
Increases in the oil prices causes inflation in an economy to rise. As oil is used as a factor of production for several goods or services, it causes their cost of production to increase, which in turn is reflected in the higher prices charged for these goods. Inflation is the measure of the rate of change in the price level of a basket of goods and services.
Unemployment is negatively related with inflation, as modeled by the Philips Curve. Given by A.W. Phillips, the Phillips Curve shows that there exist an inverse relationship between the rate of unemployment and the rate of increase in nominal wages. It says that there is a trade-off between inflation and the unemployment rate. If the inflation rate is increasing, the unemployment rate in the economy would be decreasing.
4. The text notes that changes in oil prices can affect the inflation-unemployment outcome. Explain what...
1 a. Suppose the government cuts transfer payments in an economy with an inflationary gap. How would this policy affect bond prices, interest rates, investment, the exchange rate, net exports, real GDP, and the price level? Show your results graphically. b. Given the nature of the implementation lag discussed in the text, discuss possible measures that might reduce the lag. 2 a. Federally funded student aid programs generally reduce benefits by $1 for every $1 that recipients earn. Do such...
eopunents are and how they affect pe ear ve relationship between inflation and the unemployment rate. ch 14, notes) New classical economists argued that anticipated monetary and fiscal policy d no effect on output (policy ineffectiveness postulate) and potentially caused a misallocation of resources in the long run. Explain why they believe these two ideas. ch 1 eopunents are and how they affect pe ear ve relationship between inflation and the unemployment rate. ch 14, notes) New classical economists argued...
1. How the AD/AS Model incorporation Growth, Unemployment, and inflation. 2. What causes changes in unemployment over the short run? 3. How a central bank excutes monetary policy? 4. What is rule of law with examples
1. What does an ELISA test for? 2. What variables can affect the outcome? (Name 4) 3. What are the three important limitations of an ELISA? Explain each. 4. In the virtual lab, the ELISA plate has been pretreated to bind SLE antigen to each well. WHY? How do you expect the assay setup to differ in our case where the antigen of interest is present in a heterogenous sample in small quantities? 5. Why are there both a positive...
Explain what happens to the inflation, unemployment, and output gap in the short run in each of the following circumstances. do not need to graph but explain which part of IS/MP/PC is affected and why. 1.There is deep recession in China. 2.The stock market crashes and causes consumers to lose confidence in the economy.
4. The text notes that a 10% increase in the money supply may not increase the price level by 10% in the short run. Explain why. explain with graph pls
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,...
1. Is the Phillips curve a myth? Intertemporal tradeoff between inflation and unemployment After the World War II, empirical economists noticed that, in many advanced economies, as unemployment fell, inflation tended to rise, and vice versa. The inverse relationship between unemployment and Inflation, was depicted as the Phillips curve, after William Phillips of the London School of Economics. In the 1950s and 1960s, the Phillips curve convinced many policy makers that they could use the relationship to pick acceptable levels...
1. draw this graph with a multi point line Inflation Rate (%) Unemployment Rate (%) 5 2 3 4 1 6 0 7 Use the data in the accompanying table and the multi-point line tool to plot a short-run Phillips curve and label it "PC." 2. Deflation can be a problem because it: leads to higher wages. makes it more difficult to pay off debt. can easily become hyperinflation. increases interest rates. 3. The idea that a change in the...
What are the different types of unemployment? Have you experienced unemployment? If so, which type? Explain. What is unemployment in California? Pick two more states and report the unemployment rate. Do those numbers surprise you? Explain why or why not. Click on the green graph icon next to the state to see unemployment rates from previous years.