Question

T/F

a) In the US Today, inflation expectations are anchored and a reasonable                               assumption is that wage setters expect inflation to be equal to the                                target set by the FED.

b)   Okun’s law says  that a 3% decline in the short -run output  is associa-                               ted  with a 1% point rise in the unemployment rate.

c) The Phillips curve  relates the change in  unemployment rate the                                amount  of economic activity.

Answer 1

a)This is true.In the US Today, inflation expectations are anchored and a reasonable   assumption is that wage setters expect inflation to be equal to the  target set by the FED.

b)This is false.Okun's law pertains to the relationship between the U.S. economy's unemployment rate and its gross national product (GNP). It states that when unemployment falls by 1%, GNP rises by 3%.

c)This is False.The Phillips curve represents the relationship between the rate of inflation and the unemployment rate