2. Assume that the Phillips curve for Canada is given by the following equation: pt...
2. Assume that the Phillips curve for Canada is given by the following equation:
pt =pt-1 +0.1- 2ut,
- Calculate un [Hint: in the medium run, inflation rate remains the same over time:pt =pt-1].
Now rewrite the Philips curve in the following form:
pt - pt-1 = -2 (ut - un).
Suppose ut = 0.06 and pt-1 = 0.04.
b. Calculate pt [use un from part (a)]. Is pt greater than, less than or equal to pt-1?
c. Calculate pt for each of the following values of ut: 0.07, 0.08, and 0.09.
d. What happens to the change in inflation in t for each 1% increase in ut?
Homework Answers
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2. Assume that the Phillips curve for Canada is given by the
following equation:
pt...
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 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 =...
4)- Suppose for a given economy, the Phillips Curve is given by itthen 0.25 ut +...
4)- Suppose for a given economy, the Phillips Curve is given by itthen 0.25 ut + 1.25%, and the Okun's law: ut - Ut-1=-0.5gyt + 4%. Also assume that Teen Tt-1, and the growth rate of money supply has been 18% for a long time. (Total 19 points) a)- What are the inflation rate, unemployment rate, and growth rate of output at the medium run equilibrium. (4.5) b)- Calculate the natural rate of unemployment and NAIRU. (2) c)- Starting from...
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)...
Question 6 For this question, assume that the Phillips curve equation is represented by the following...
Question 6 For this question, assume that the Phillips curve equation is represented by the following equation: m,- -1 = (m + Z)-aut . Which of the following will cause a reduction in the natural rate of unemployment? an increase in m an increase in expected inflation O an increase in z an increase in actual inflation O an increase in α Question 7 1 pts For this question, assume that the Phillips curve equation is represented by the following...
For this question, assume that the Phillips curve equation is represented by the following equation: πt...
For this question, assume that the Phillips curve equation is represented by the following equation: πt - πt-1= (μ + z) - αut. An increase in the unemployment rate will cause: A. an increase in the markup over labour costs B. a decrease in the markup over labour costs C. a decrease in the inflation rate over time D. an increase in the inflation rate over time E. none of the above
2. Phillips Curve. An economy has the following functions for its short run aggregate supply (SRAS),...
2. Phillips Curve. An economy has the following functions for its short run aggregate supply (SRAS), Okun's Law (OL), and Phillips Curve (PC): SRAS: P = EP + (1/2)(y - 3) OL: (Y-Y) = -4(u-u") PC:T = ET - (1/5)( - 6) The economy begins at its natural rate of output with a stable price level equal to $5. a.) Output is at its natural level when the price level is equal to expectations. Calculate the natural rate of output...
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Questions 1. Given the H NMR spectrum and molec- ular formula for each of the following compounds, deduce the structure of the compound, estimate the chemical shifts of all its protons using the parameters in Tables 22.3–22.5, and assign the NMR sig- nals to their respective protons. (a) C.H,,Cl; 1H NMR (CDC12): 8 3.33 (2H, s); 1.10 (9H, s) (b) C-H,,0,; 1H NMR (CDC12): 8 3.88 (1H, s); 2.25 (3H, s); 1.40 (6H, s) (C) CH,,0,; 1H NMR (CDC1,): 8...
Question 1. Portfolio Analysis (2 points) a) Assume the following about assets A and B: E[7]0.1,...
Question 1. Portfolio Analysis (2 points) a) Assume the following about assets A and B: E[7]0.1, -0.09, E[TB] =0.08, o -0.04. Which one has lower absolute risk and which one has lower relative risk? (1): b) Find the mean return, E[r.), and variance, oz. of a portfolio consisting of 70% of your total wealth invested in asset A (w4=0.70), and 30% of your total wealth invested in asset B (Wg= 0.30). The correlation between assets A and B (P3) =...
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 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 =...
4)- Suppose for a given economy, the Phillips Curve is given by itthen 0.25 ut + 1.25%, and the Okun's law: ut - Ut-1=-0.5gyt + 4%. Also assume that Teen Tt-1, and the growth rate of money supply has been 18% for a long time. (Total 19 points) a)- What are the inflation rate, unemployment rate, and growth rate of output at the medium run equilibrium. (4.5) b)- Calculate the natural rate of unemployment and NAIRU. (2) c)- Starting from...
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)...
Question 6 For this question, assume that the Phillips curve equation is represented by the following equation: m,- -1 = (m + Z)-aut . Which of the following will cause a reduction in the natural rate of unemployment? an increase in m an increase in expected inflation O an increase in z an increase in actual inflation O an increase in α Question 7 1 pts For this question, assume that the Phillips curve equation is represented by the following...
2. Phillips Curve. An economy has the following functions for its short run aggregate supply (SRAS), Okun's Law (OL), and Phillips Curve (PC): SRAS: P = EP + (1/2)(y - 3) OL: (Y-Y) = -4(u-u") PC:T = ET - (1/5)( - 6) The economy begins at its natural rate of output with a stable price level equal to $5. a.) Output is at its natural level when the price level is equal to expectations. Calculate the natural rate of output...
Questions 1. Given the H NMR spectrum and molec- ular formula for each of the following compounds, deduce the structure of the compound, estimate the chemical shifts of all its protons using the parameters in Tables 22.3–22.5, and assign the NMR sig- nals to their respective protons. (a) C.H,,Cl; 1H NMR (CDC12): 8 3.33 (2H, s); 1.10 (9H, s) (b) C-H,,0,; 1H NMR (CDC12): 8 3.88 (1H, s); 2.25 (3H, s); 1.40 (6H, s) (C) CH,,0,; 1H NMR (CDC1,): 8...
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