Consider two countries: Eastland and Westland. Eastland’s long-run Phillips curve sits further to the right than does Westland’s long-run Phillips curve.

Wrong answers have been eliminated QUESTION 1 According to the equation of exchange, if real GDP...

Wrong answers have been eliminated QUESTION 1 According to the equation of exchange, if real GDP and money supply stays the same, a. inflation is always zero. b. money velocity must stay the same. c. the rate of inflation equals the rate of change in money velocity. d. None of the above.(Wrong) QUESTION 2 Structural unemployment occurs because a. workers give up looking for a job due to prolonged unemployment. b. employers are not hiring due to bad economic and...

Question) If the natural rate of unemployment falls, a. both the short-run Phillips curve and the...

Question) If the natural rate of unemployment falls, a. both the short-run Phillips curve and the long-run Phillips curve shift. b. only the short-run Phillips curve shifts. c. only the long-run Phillips curve shifts. d. neither the short-run nor the long-run Phillips curves shift. Question) If the long-run Phillips curve shifts to the right, then for any given rate of money growth and inflation the economy has a. higher unemployment and lower output. b. higher unemployment and higher output. c....

The Long-Run Phillips Curve: The Natural Rate of Unemployment, based on the assumption of a vertical...

The Long-Run Phillips Curve: The Natural Rate of Unemployment, based on the assumption of a vertical long run aggregate supply curve.

1- The long-run aggregate supply curve assumes that the unemployment rate is more than 9 percent....

1- The long-run aggregate supply curve assumes that the unemployment rate is more than 9 percent. only laborers are fully employed. all factors of production are fully employed. there is no government purchasing of goods and services. 2-The natural rate of unemployment will help determine the level of economic growth in the economy. the position of the long-run aggregate supply curve. low levels of inflation. the open economy effect. 3-The vertical axis for an aggregate demand curve measures real income....

Consider the following short run Phillips Curve: p = pE – b(u – 0.06) where u...

Consider the following short run Phillips Curve: p = pE – b(u – 0.06) where u is the unemployment rate, p is the inflation rate, pE is the expected rate of inflation, and b is a parameter. Carefully graph the short and long-run Phillips Curve. What is NAIRU an acronym for? Illustrate the NAIRU in your diagram. Why is b believed to be positive? That is, why do economists believe that lower unemployment rates cause higher inflation? Explain why some...

Consider a hypothetical economy that is at a short run and long run equilibrium. Suppose that...

Consider a hypothetical economy that is at a short run and long run equilibrium. Suppose that in this economy, there is a change in the regulation of the labor market This change in regulation makes it easier for employers to hire and fire people, thus reducing frictional unemployment. Assume further that there is no change in people’s inflation expectations after this. Considering the Phillips Curve, answer what will happen to: i)    The inflation rate. ii)    The unemployment rate. In the...

Consider a hypothetical economy that is at a short run and long run equilibrium. Suppose that...

Consider a hypothetical economy that is at a short run and long run equilibrium. Suppose that in this economy, there is an adverse (i.e. negative) supply shock. Additionally, there is an increase in people’s expectations about future inflation. Considering the Phillips Curve, answer what will happen to: i)    The inflation rate. ii)    The unemployment rate. In the short-run for such an economy. Inflation will increase; unemployment will increase. Inflation will decrease; unemployment will decrease. Inflation will increase; unemployment will decrease....

Please draw a fully-labeled Short-Run Phillips Curve with an inflation rate of 2% and unemployment rate...

Please draw a fully-labeled Short-Run Phillips Curve with an inflation rate of 2% and unemployment rate of 7% clearly labeled. Now on the same graph, show the effects on inflation and unemployment of an increase in the price of oil brought on by political strife in the Middle East, Venezuela and Eastern Europe (a negative supply shock).

QUESTION 7 The long-run aggregate supply curve intersects the horizontal axis at the: a- potential level...

QUESTION 7 The long-run aggregate supply curve intersects the horizontal axis at the: a- potential level of output. b- expected rate of inflation. c- current level of output. d- actual rate of inflation. QUESTION 8 If inflation is very high, say 50 or 100 percent a year, monetary policymakers wishing to lower it will shift their focus to controlling: a- the short-term interest rate. b- the exchange rate. c- the long-term interest rate. d- money growth. QUESTION 9 Which of...

Suppose the government of a country wants to achieve long run growth and they are thinking...

Suppose the government of a country wants to achieve long run growth and they are thinking they can do this by printing money. Is this an effective policy for growth? In country BETA, full-employment level of real GDP is increasing at a rate of 6% per period and the money supply is growing at a 8% rate. What will be the long-run inflation rate in this country, assuming constant velocity?