4. What is not an assumption of the Neoclassical view related to inflation? a. Full employment b. Constant velocity c. Increasing returns to scale d. Close relationship between money supply and prices
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- 2. What is the eqution and shape of the modem aggregate supply curve according to imperfect infomation model? Using the equation of Aggregate Supply (AS) derive the equation of Expectation augmented Phillips curve and explain causes of inflation in tems of it. How does expectation augmented Phillips curve explain Stagflation?1.Select one fro the given options a.The sticky wage model of AS: I. explains the vertical AS in the short run. ii. assumes flexible prices and nominal wages. iii. assumes flexible prices and sticky real wages. iv. explains the short-run deviations of the actual output from the potential one b. Choose the correct statement: i. According to the Life-cycle hypothesis the consumption changes only with unexpected changes in income. ii. Consider the life cycle hypothesis. The human consumption function in the form C = 0.025W + 0.5Y implies that life expectancy is 40 years iii. Consider the life cycle hypothesis. The human consumption function in the form C = 0.025W + 0.5Y implies that a half of one's life expectancy is spent in retirement iv. Consider the life cycle hypothesis. The human consumption function in the form C = 0.025W + 0.5Y implies that consumption will increase by CZK 25, when wealth will increase by CZK 1,00According to adaptive expectations, what happensto the inflation rate and the unemploymentrate in the following situations?a. Initially, the economy is operating at thenatural rate of 6 percent unemployment.The anticipated rate of inflation is6 percent, and the actual rate is also6 percent.b. In the next period, there is an unexpected risein the inflation rate to 10 percent.c. In the next period, there is an unexpected risein the inflation rate to 12 percent.
- What happens when the economy is in an inflationary gap? The money wage rate and real GDP OA. falls; decreases OB. rises; decreases OC. falls; increases OD. rises; increases2. If a higher inflation is expected, what would you expect to happen to the shape of theyield curve? Why?One of the business cycle factsis that “the nominal money supply is a pro-cyclicaland leading variable”. Traditional Keynesian theory explains this fact with the transmissionmechanism of money. The New Classical approach uses misperceptions theory explanation. TheRBC theorist try to explain the relationship with reverse causation theory.a. According to Keynesian theory, under what conditions money would be effective to havereal effects? If money is effective to have real effects, explain the transmission mechanism thatshows the causation from money to output.b. According to the “misperceptions theory of business cycles”, how and why an increase innominal money supply causes an increase in real output in the short run by affecting thebehavior of producers? Does your answer change if the monetary shock is anticipated orunanticipated? Explain by using the IS-LM-FE and AD-AS Frameworks.c. Explain how reverse causation could occur and what is the explanation from RBC theoristthat money is…
- In the United States, nominal interest rates tend to move economy is experiencing Select one: A. procyclically, a recession B. procyclically; an expansion C. countercyclically; an expansion D. countercyclically; a recession nominal interest rates increase. This means that when theWhich of the following expectations will NOT increase spending? a. Employment b. Laying off c. Maturity of Investment d. PromotionStagflation occurs when the economy's are both high. Lütfen birini seçin: O A. unemployment rate and deflation rate O B. inflation rate and growth rate O C inflation rate and interest rate OD unemployment rate and growth rate OE inflation rate and unemployment rate
- In theory, inflation not only ______ the value of consumers' money over time, but it also increases the ____ of producers over time. a.Decreases, wages b.Increases, interest rates c.Decreases, unemployment d.Increases, real GDPRefer to the accompanying figure. LRAS Inflation a A 0, y' Output O O An economy is currently in long-run equilibrium at point B, at an inflation rate of m, which is too high to sustain economic growth. If an anti-inflationary policy is enacted, the economy will be in short-run equilibrium at point creating gap. O SRAS O SRAS AD' AD A; an expansionary A; a recessionary D; a recessionary D; an expansionary1. Use the AD-AS model attached to explain and illustrate the difference between demand side measures and supply side measures and give an example of each. Also mention which markets are embedded within each curve. 2. Use the AD-AS model to Analyze and illustrate the short run impact of an increase in energy prices on GDP, inflation and employment. Which type of inflation is this?
