Give five explanations for the trade-off between unemployment and inflation in the short and long run.
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Give five explanations for the trade-off between unemployment and inflation in the short and long run.
The short-run trade-off between the rate of inflation and the unemployment rate is best represented by: A. the long-run aggregate supply curve. B. the aggregate demand curve. C. the short-run aggregate supply curve. D. the Phillips curve.
Lucas and Sargent argue that the short-run trade-off between unemployment and inflation is caused by workers and firms using Fed policy to predict inflation. workers and firms using all the information available to predict inflation. workers and forms rapidly adjusting wages and prices in response to changes in expectations. workers and forms being fooled by unexpected changes in monetary policy.
Explain the tradeoff between inflation and unemployment in the short-run and the long-run.
Why do some macroeconomists believe there is a trade-off between unemployment and inflation (that is, if you want to reduce inflation, you will have to accept a rise in unemployment, and if you want to reduce unemployment, you will have to accept higher inflation)?
The Phillips curve shows the trade off between inflation and unemployment - what measures should/could be taken to move the Phillips curve to the left (inwards) . Refer to "Supply side economics" - do we still believe in the trade off between inflation and unemployment?
1. Which of the following best describes the relationship between inflation and unemployment? A) As inflation increases, unemployment will always increase B) It includes periods in which there is a trade-off between the two, but is overall more nuanced and varied C) There is never a trade-off between inflation and unemployment D) It adheres to the Phillips curve trade-off in both the short and long run time periods 2. A large decrease in government purchases due to a reduction in...
Consider the relationship between inflation, output, and unemployment. Think about the economy in the long run. In the long run, what determines unemployment? (2 points) In the long run, what determines output (GDP)? (2 points) In the long run, what determines inflation? (2 points) In the long run, is there a tradeoff between inflation and unemployment? Explain why or why not (3 points).
Distinguish between the short-run and the long-run in a macroeconomic analysis. Why is the relationship between unemployment and inflation different in the short-run and the long-run?
The Figure illustrates the expectations theory of the Phillips curve Short Run Statistical Trade-Off Versus Long Run No-Tradeoff;. This theory states that a. increasing the inflation rate causes a lower unemployment rate in the long run; 4 b. Phillips curves shift when the real GDP growth increases; c. short-run Phillips curves slope downwards & the long-run Phillips curve is vertical; d. all of the above. . The US civilian labor force participation rate US Labor Force Participation Rate (Blue); Real...
Suppose the short run Phillips Curve is given by: Inflation = Expected Inflation +.2 -4*Unemployment Rate Assume that initially, people expect zero inflation. Draw the short run Phillips Curve and the long run Phillips Curve on a graph On the graph, represent what would happen in the short run if the government decided to run 4% inflation (setting inflation =0.04). . On the graph, represent what would happen in the long run if the government decided to run 4% inflation.