Homework Answers
The correct option is the rate of inflation should neither increase nor decrease.
For this question, assume that expected inflation this year is equal to past year's inflation. Also assume that the unemployment rate has been equal to the natural rate of unemployment for some time. Given this information, we know that the rate of inflation should neither increase nor decrease.
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Question 7 0.2 pts For this question, assume that expected inflation this year is equal to past year's inflation. Also...
7) An increase in the price of oil will likely cause which of the following? A) increase the mark...
7) An increase in the price of oil will likely cause which of the following? A) increase the markup in the Phillips curve equation B) increase the sum "m z" in the Phillips curve equation C) increase the natural rate of unemployment D) all of the above 8) Suppose the Phillips curve is represented by the following equation: -mt-1-0.2-2ut- Given this information, we know that the natural rate of unemployment in this economy is A) 1096. B) 20%. C) 6.5%....
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...
Suppose that over the past decade, U.S. inflation is less than that in Mexico. Further assume...
Suppose that over the past decade, U.S.
inflation is less than that in Mexico. Further assume that during
this same period, the dollar depreciates relative to the Mexican
peso. Given this information, Group of answer choices the real
exchange rate remains unchanged the real exchange rate must
decrease the real exchange rate must increase. the real exchange
rate can increase or remain the same, but not decrease.
Question 3 1 pts Suppose that over the past decade, U.S. inflation is...
Please help with these questions Question 10 0.4 pts According to adaptive expectations theory, when inflation...
Please help with these questions
Question 10 0.4 pts According to adaptive expectations theory, when inflation accelerates O people change to rational expectations. O people underestimate inflation. O people correctly estimate inflation. unemployment must increase. people overestimate inflation. Question 11 0.4 pts An increase in long-run aggregate supply can be expected to_the price evel and the natural rate of unemployment. Ohave no effect on; increase O decrease; have no effect on decrease: decrease Ohave no effect on; have no effect...
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)...
please answer Question 7: Inflation targeting and the Taylor rule in the IS-LM model Consider a...
please answer Question 7:
Inflation targeting and the Taylor rule in the IS-LM model Consider a closed economy in which the central bank follows an interest rate rule. The IS relation is given by Y C(Y- T) I(Y,r) G Where r is the real interest rate. The central bank sets the nominal interest rate according to the rule i = i* + a(n° =- T*) + b(Y- Y1) Where T is expected inflation, T* is the target rate of inflation,...
Consider an economy with the following Money market information. Is the past year inflation rate was...
Consider an economy with the following Money market information. Is the past year inflation rate was 4%, the output grew by 5%, and the nominal interest rate on non-monetary assets grew by 2.5%. Moreover, we know that the central bank of this economy increased the Money supply of economy by 6%. As an economist you know that the interest elasticity of Money demand of this economy is -0.2. However, you don’t have any information about the income elasticity of Money...
6. 7. Inflation targeting and the Taylor rule in the IS-LM model Consider a closed economy...
6.
7.
Inflation targeting and the Taylor rule in the IS-LM model Consider a closed economy in which the central bank follows an interest rate rule. The IS relation is given by Y C(Y- T) I(Y,r) G Where r is the real interest rate. The central bank sets the nominal interest rate according to the rule i = i* + a(n° =- T*) + b(Y- Y1) Where T is expected inflation, T* is the target rate of inflation, and Yn...
6. 7. Inflation targeting and the Taylor rule in the IS-LM model Consider a closed economy...
6.
7.
Inflation targeting and the Taylor rule in the IS-LM model Consider a closed economy in which the central bank follows an interest rate rule. The IS relation is given by Y C(Y- T) I(Y,r) G Where r is the real interest rate. The central bank sets the nominal interest rate according to the rule i = i* + a(n° =- T*) + b(Y- Y1) Where T is expected inflation, T* is the target rate of inflation, and Yn...
tegrity standards. Question 1 5 pts Assume that a 3-year Treasury security yields 5.10%. Also assume...
tegrity standards. Question 1 5 pts Assume that a 3-year Treasury security yields 5.10%. Also assume that the real risk-free ratę (r") is 0.75%, and inflation is expected to be 2.25% annually for the next 3 years. In addition to inflation, the nominal interest rate also includes a maturity risk premium (MRP) that reflects interest rate risk. What is the maturity risk premium for the 3-year security? Round your answer to two decimal places Your answer should be between 0.00...
7) An increase in the price of oil will likely cause which of the following? A) increase the markup in the Phillips curve equation B) increase the sum "m z" in the Phillips curve equation C) increase the natural rate of unemployment D) all of the above 8) Suppose the Phillips curve is represented by the following equation: -mt-1-0.2-2ut- Given this information, we know that the natural rate of unemployment in this economy is A) 1096. B) 20%. C) 6.5%....
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...
Suppose that over the past decade, U.S.
inflation is less than that in Mexico. Further assume that during
this same period, the dollar depreciates relative to the Mexican
peso. Given this information, Group of answer choices the real
exchange rate remains unchanged the real exchange rate must
decrease the real exchange rate must increase. the real exchange
rate can increase or remain the same, but not decrease.
Question 3 1 pts Suppose that over the past decade, U.S. inflation is...
Please help with these questions
Question 10 0.4 pts According to adaptive expectations theory, when inflation accelerates O people change to rational expectations. O people underestimate inflation. O people correctly estimate inflation. unemployment must increase. people overestimate inflation. Question 11 0.4 pts An increase in long-run aggregate supply can be expected to_the price evel and the natural rate of unemployment. Ohave no effect on; increase O decrease; have no effect on decrease: decrease Ohave no effect on; have no effect...
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)...
please answer Question 7:
Inflation targeting and the Taylor rule in the IS-LM model Consider a closed economy in which the central bank follows an interest rate rule. The IS relation is given by Y C(Y- T) I(Y,r) G Where r is the real interest rate. The central bank sets the nominal interest rate according to the rule i = i* + a(n° =- T*) + b(Y- Y1) Where T is expected inflation, T* is the target rate of inflation,...
6.
7.
Inflation targeting and the Taylor rule in the IS-LM model Consider a closed economy in which the central bank follows an interest rate rule. The IS relation is given by Y C(Y- T) I(Y,r) G Where r is the real interest rate. The central bank sets the nominal interest rate according to the rule i = i* + a(n° =- T*) + b(Y- Y1) Where T is expected inflation, T* is the target rate of inflation, and Yn...
6.
7.
Inflation targeting and the Taylor rule in the IS-LM model Consider a closed economy in which the central bank follows an interest rate rule. The IS relation is given by Y C(Y- T) I(Y,r) G Where r is the real interest rate. The central bank sets the nominal interest rate according to the rule i = i* + a(n° =- T*) + b(Y- Y1) Where T is expected inflation, T* is the target rate of inflation, and Yn...
tegrity standards. Question 1 5 pts Assume that a 3-year Treasury security yields 5.10%. Also assume that the real risk-free ratę (r") is 0.75%, and inflation is expected to be 2.25% annually for the next 3 years. In addition to inflation, the nominal interest rate also includes a maturity risk premium (MRP) that reflects interest rate risk. What is the maturity risk premium for the 3-year security? Round your answer to two decimal places Your answer should be between 0.00...
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