Question

Stagflation can be defined as increasing rates of unemployment with no decrease in the inflation rate...

Stagflation can be defined as increasing rates of unemployment with no decrease in the inflation rate OR increasing rates of inflation with no decrease in unemployment rates. Stagflation therefore

a.         suggests the Phillips’ Curve relationship is improving.

b.         suggests that the misery index is relatively high.

c.         suggests the misery index is relatively low.

d.         says nothing about the misery index but tells us whether fiscal or monetary policy is more important

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

A misery index is computed as a sum of unemployment rate and inflation rate. Recession have sometimes a rising unemployment rate accompanied by a rising misery index, reflecting a rising inflation. The periods of high inflation and high unemployment (for example, the oil price shock that brought a recession in 1970s) had highest misery index at that time. Now that there are increasing rates of unemployment with no decrease in the inflation rate OR increasing rates of inflation with no decrease in unemployment rates. Stagflation is suggesting tha misery index is more or less same.

Hence b, c and d are incorrect. Due to the fact that the tradeoff is reduced, it seems Phillips curve is improving. So Option A is correct.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1) In the U.S., high employment is defined as: A. An unemployment rate near zero to...
1) In the U.S., high employment is defined as: A. An unemployment rate near zero to be sure that we are producing and employing near our potential. B. An unemployment rate no lower than 4-5% of the labor force so as to prevent an outbreak of inflation. C. An unemployment rate between 2-3% of the labor force to make sure that we are providing jobs for all who wish to work. D. An unemployment rate of 4-5% to prevent the...
1) If the Federal Reserve conducts an open market purchase, we can expect that the short-run...
1) If the Federal Reserve conducts an open market purchase, we can expect that the short-run Phillips curve will shift left. the short-run Phillips curve will shift right. t here will be a movement to the right along the short-run Phillips curve. there will be a movement to the left along the short-run Phillips curve. the long-run Phillips curve will shift right. 2) In the long run, the Phillips Curve shows that the natural rate of unemployment is independent of...
55. When compared with monetarist theory, Keynesian theory places greater emphasis on: (a) changes in supply...
55. When compared with monetarist theory, Keynesian theory places greater emphasis on: (a) changes in supply of money as a determinant of GDP and inflation; (b) totally discounts the role of monetary policy in determining GDP and inflation; (c) fiscal policy as a determinant of money supply (d) changes in interest rates as a prerequisite to GDP growth and inflation. 56. Over time, the flattening and shifting inward of the traditional Phillips Curve suggests that: (a) the relationship between inflation...
You have previously provided information on both unemployment rates and the inflation rate for the US...
You have previously provided information on both unemployment rates and the inflation rate for the US and for your country. Put these together and draw some conclusions about the relationship between these two rates, and compare to the theoretical arguments in this chapter. Is there this tradeoff, or does the Phillips relationship not appear to be present? Why or why not? Unemployment rate unchanged at 3.6 percent in May 2019. In May 2019, the unemployment rate was unchanged over the...
Question 1 The Federal Reserve considers ideal inflation rate to be a. 0% b. 1% c....
Question 1 The Federal Reserve considers ideal inflation rate to be a. 0% b. 1% c. 2% d. 3% e. dependent on current unemployment rate Question 2 The dual mandate given to the Federal Reserve by the Congress in 1978 means that the two goals the Fed focuses on are a. low employment and low inflation b. low employment and low output c. low unemployment and high output d. low unemployment and low inflation Question 3 Okun's Law relates a....
The aggregate demand curve shows the relationship between the aggregate price level and: A) aggregate productivity....
The aggregate demand curve shows the relationship between the aggregate price level and: A) aggregate productivity. B) the aggregate unemployment rate. C) the aggregate quantity of output demanded by households, businesses, the government, and the rest of the world. D) the aggregate quantity of output demanded by businesses only. 2.When the aggregate price level increases, the purchasing power of many assets falls, causing a decrease in consumer spending. This is known as the _____ effect and is a reason why...
56. Over time, the flattening and shifting inward of the traditional Phillips Curve suggests that: (a)...
56. Over time, the flattening and shifting inward of the traditional Phillips Curve suggests that: (a) the relationship between inflation and unemployment is stronger than ever; (b) a 1% change in the inflation is now associated with smaller changes than before in the unemployment rate; (c) every unemployment rate is now associated with a lower inflation rate than previously; (d) the U.S. now has an R* much higher than 1%. 57. According to the modern Phillips Curve, current inflation statistically...
Answer true,false,or uncertain.Please briefly explain your answer. a) —the unemployment rate is decreasing,employment is increasing. Answer...
Answer true,false,or uncertain.Please briefly explain your answer. a) —the unemployment rate is decreasing,employment is increasing. Answer true,false,or uncertain.Please briefly explain your answer. b) Consider a standard Keynesian model but with two types of consumers,Type A who have low marginal propensities to consume and Type B who have high marginal propensities to consume. —An economy with relatively more Type A consumers is more vulnerable to a negative shock to investment demand. Answer true,false,or uncertain. Please briefly explain your answer. c) Consider...
53. Which of the following is the Fed’s most important policy interest rate? (a) federal funds...
53. Which of the following is the Fed’s most important policy interest rate? (a) federal funds rate; (b) the rate on 2-year Treasury notes; (c) the rate on 10-year Treasury notes; (d) the rate on 30-year fixed-rate mortgages. 54. In which market would a bank with excess reserves attempt to sell reserves to a bank with insufficient reserves? (a) Treasury bill market? (b) federal funds market; (c) bond market; (d) NASDAQ. 55. When compared with monetarist theory, Keynesian theory places...
54. In which market would a bank with excess reserves attempt to sell reserves to a...
54. In which market would a bank with excess reserves attempt to sell reserves to a bank with insufficient reserves? (a) Treasury bill market? (b) federal funds market; (c) bond market; (d) NASDAQ. 55. When compared with monetarist theory, Keynesian theory places greater emphasis on: (a) changes in supply of money as a determinant of GDP and inflation; (b) totally discounts the role of monetary policy in determining GDP and inflation; (c) fiscal policy as a determinant of money supply...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT