Question

If expected inflation equals zero, and currently actual inflation is equal to expected inflation, the short run Phillips Curve will most likely intersect the horizontal axis at:

Group of answer choices

a 3% unemployment rate.

a 2% unemployment rate.

a zero (0) percent unemployment rate.

the natural rate of unemployment.

Answer #1

Answer- **Correct option is 'D'**

If expected inflation equals zero, and currently actual
inflation is equal to expected inflation, the short run Phillips
Curve will most likely intersect the horizontal axis at **the
natural rate of unemployment.** A point where the Phillips
curve intersect the horizontal axis, is the rate of unemployment
consistent with stable price, called Non-accelerating inflation
rate of unemployment (NAIRU), also referred to as the 'Natural rate
of unemployment'.

Suppose that the natural rate of unemployment equals 6%, and the
public expect inflation to equal 4 %, and the coefficient
a in PC equation = 0.4.
What is the unemployment rate when the actual inflation equals
2%? What if the actual inflation rate equals 10%?
During the 1990s, we observed the co-existence of low inflation
and low unemployment. One of the arguments given by macroeconomists
is that the expected inflation was lower than usual during the
1990s. Suppose now...

30. Suppose that the natural rate of unemployment equals 6%, and
the public expect inflation to equal 4 %, and the coefficient a in
PC equation = 0.4.
a. What is the unemployment rate when the actual inflation
equals 2%? What if the actual inflation rate equals 10%?
b. During the 1990s, we observed the co-existence of low
inflation and low unemployment. One of the arguments given by
macroeconomists is that the expected inflation was lower than usual
during the...

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.

Eurozone unemployment rose to 10.7 percent. At the same? time,
Eurozone inflation unexpectedly rose to 2.7 percent a?year, up from
the previous? month's 2.6 percent a year.
?Source:
Huffington
Post?,
March? 1, 2012
A very high unemployment rate can be accounted for by the
Phillips curve model by all of the following
except?_______.
A.
a movement down along the? short-run Phillips curve if there is
no change in the natural unemployment rate
B.
a rightward shift of the? long-run Phillips...

Suppose that in 2020, the natural rate of unemployment is 5% and
the actual rate of unemployment is also 5%. Also inflation equals
4% and people expect inflation to be 4% next year (and all years
thereafter). Using the Phillips curve logic, suddenly there is a
rise in aggregate demand (maybe due to a jump in investment or
government spending, maybe a tax cut.)
A. in the short run by 2021, what happens to inflation and
unemployment ? Explain why...

Answer the questions below on the basis of the following
data.
Actual Inflation
Expected Inflation
Point A:
3%
2%
Point B:
4%
4%
Point C:
2%
4%
Suppose the equation describing the Phillips curve is
π = πe − 2(U − 5).
For each of the points: A, B, and C, calculate the unemployment
rate. Show all your work.
Based on the equation in part a, what is the numerical value of
the natural rate of unemployment? Explain how you...

Answer the questions below on the basis of the following
data
actual inflation
expected inflation
Point A
3%
2%
Point B
4%
4%
Point C
2%
4%
A. Suppose the equation describing the Phillips curve is π = π e
− 2(U − 5). For each of the points: A, B, and C, calculate the
unemployment rate. Show all your work.
B. Based on the equation in part a, what is the numerical value
of the natural rate of unemployment?...

In March 2013 the Fed announced that it might decrease its open
market purchases of securities by the end of the year. This
announcement suggests that the Fed is concerned that
a.
the unemployment rate will increase.
b.
the inflation rate will rise.
c.
the federal funds interest rate will fall too low for the Fed
to control it.
d.
the federal funds interest rate will rise too high for the Fed
to control it.
In the aggregate supply-aggregate demand...

Question 2
Suppose the economy is currently having an inflation expectation
which equals to actual inflation. Explain how the output level will
be affected in the short-run and long-run if there is a demand
shock that drives the actual inflation to fall below expectation.
(10%)

Because the Fed doubled the monetary base in 2008 and because
the government has spent billions of dollars bailing out troubled
banks, insurance companies, and auto producers, some people are
concerned that a serious upturn in the inflation rate will occur,
not immediately but in a few years' time.
At the same time, massive changes in the global economy might
bring the need for structural change in the United States.
Structural change__________.
A ) Increases the natural unemployment rate and...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 20 minutes ago

asked 26 minutes ago

asked 26 minutes ago

asked 30 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago