Which of the following best represents the long-run Phillip's Curve? O Unemployment is inversely correlated with inflation Expansionary monetary policy will lead to an expansion of output Contractionary monetary policy will lead to deflation O Unemployment is positively correlated with inflation
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- Consider the Efficiency Wage story. Suppose we had several periods of 0 inflation. Let ST represent the total supply of labor; SNS the supply of non-shirking (not lazy) workers, and SShrk the number of shirking (lazy) workers. Suppose we had several periods of 0% inflation. Then if we had an increase in Aggregate Demand that caused an increase in the Aggregate Price level, we would see which of the following in the short run? Group of answer choices a) higher inflation and lower unemployment. b) None of the other options. c) lower inflation (which would be deflation given our premise) and higher unemployment. d) higher inflation and higher unemployment. e) lower inflation (which would be deflation given our premise) and lower unemployment.Suppose the inflation rate has been 15 percent for the past four years. The unemployment rate is currently at the natural rate of unemployment of 5 percent. 30 The Bank of Canada decides that it wants to permanently reduce the infation rate to 5 percent. To de this, the Bank of Canada would use torg-tun Philips curve 25 poley. the natural 20 As a result of this policy, the unemployment rate will be rate of 6 percent and the inflation rate will be edging slowly 15 Use the line drawing tool to draw the line that ilustrates what will happern the Bank of Canadn maintains this policy long enough that workers and fims lower their expectations of future inflation. Property label this line. 10 Short-un Phiips curve Carefully follow the instructions above, and only draw the required objects. 5- Ir the the Bank of Canada policy is successful, the infation rate will be percent and the unemployment rate will beO percent. 10 Unempioyment rate (percent) Click the graph, choose a tool in the palette…With regard to the economy, the term negative inflation is synonymous with which of the following? O depression recession O deflation O hyperinflation
- The economic response to the overnight reduction in the French money supply by 20 percent in 1724: confirmed the quantity theory by leading to an immediate 20 percent reduction in the price level. O confirmed the neutrality of money because no real variables were affected by this nominal change. confirmed that money is not neutral in the short run because both output and prices dropped. contradicted Okun's law because decreases in output were not associated with increases in unemployment.Stagflation, that is, high unemployment combined with high inflation Multiple Choice O O о O cannot persist, since the economy eventually will return to full employment can only occur if expansionary monetary policy is combined with restrictive fiscal policy is inconsistent with the inflation-expectations-augmented Phillips curve cannot occur as long as the expected inflation rate is above the actual inflation rate can only occur during the period of economy expansionAccording to the quantity theory of money, an increase in long-run real GDP inflation, and the Phillips curve demonstrates that inflation with rising real GDP. This is because the quantity theory is a theory of price behavior. A. reduces; increases; long-run B. raises; increases; short-run OC. has zero influence on; decreases; money-neutral D. raises; decreases; short-run E. reduces; does not move; Keynesian
- In reality, the Fed's information is fairly imprecise in regards to Multiple Choice inflation rates. actual real GDP. unemployment. potential GDP. In reality, the Fed's information is fairly imprecise in regards to Multiple Choice O O O O inflation rates. actual real GDP. unemployment. potential GDP.According to the Sticky Price Theory, SRAS curve is upward sloping because: O Some fırms are slow to respond to overall price level changes in the economy. All firms are slow to respond to overall price level changes in the economy. None of the firms respond to overall price level changes in the economy. Some fırms are slow to respond to overall technological changes in the economy. Which of the following correctly explains the sticky-wage effect? As wages are sticky in the short-run due to labor contracts, any increase in price level reduces the real wage, which in turn, reduces the cost of production for the firms and they decrease their supply in the short-run. O As wages are sticky in the long-run due to labor contracts, any decrease in price level reduces the real wage, which in turn, reduces the cost of production for the firms and they decrease their supply in the short-run. As wages are sticky in the long-run due to labor contracts, any decrease in price level increases the…Pay rises offered despite Bank of England plea for restraint over inflationEmployers are set to increase wages at their fastest pace in almost a decade this year despite a pleafor pay restraint from the governor of the Bank of England.Some 46 per cent of companies struggling to keep hold of workers have already raised the pay ofincumbent staff, according to research, and 40 per cent are planning to do so in future.Source: https://www.thetimes.co.uk/article/pay-rises-offered-despite-bank-of-england-plea-for-restraintover-inflation-xhf8dbn5bAccessed: 14/02/222Which of the following macroeconomic objectives is being pursued by the Bank of England? a) Price stabilityb) Full employmentc) Economic growthd) Wage rate stability
- What is meant by the substitution effect when measuring inflation and does the substitution effect cause the stated inflation rate to overstate or understate the true effect of inflation?The economy starts out on the curves AD, and SAS. Some events then occur that generate a cost-push inflation. What might those events have been? Describe their initial effects and explain how a cost-push inflation spiral develops. ~.. Which of the following events might cause a cost-push inflation? OA. a decrease in exports OB. an increase in the money wage rate or an increase in the money prices of raw materials C. an increase in the quantity of money OD. a decrease in government expenditure Starting at point A, the initial effect of a cost-push inflation is a move to point inflation spiral proceeds, it follows the path O A. C; B, H, G, I O B. B; E, G, I O C. C; E, H, I O D. E; I As a cost-push 230 190- 150- 1104 70- Price level (GDP deflator, 2007 = 100) LAS 30+ 13 D G B + E A H C SAS2 SAS₁ F ADO 15 17 19 Real GDP (billions of 2007 dollars) SASO AD₂ AD₁ 21 Q QIn the Keynesian model with nominal wage rigidity, an unanticipated monetary expansion the real interest rate in the short run and the prices of goods and services in the short run. Select one: Oa raises increases Ob. lowers; increases Oc raises; does not change Od lowers; does not change