1)Social loss is L=(u-5)^2+(pi-2)^2 Philips curve is u=6-(pi-pi_e), where pi is actual inflation rate, pi_e is expected inflation by the public. If gov't is honest, then gov't best choice of pi is: pi=___ (2)Social loss is L=(u-5)^2+(pi-2)^2 Philips curve is u=6-(pi-pi_e), where pi is actual inflation rate, pi_e is expected inflation by the public. If gov't is honest, then the smallest social loss possible is L=_____
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1.(1)Social loss is L=(u-5)^2+(pi-2)^2
Philips curve is u=6-(pi-pi_e), where pi is actual inflation rate, pi_e is expected inflation by the public.
If gov't is honest, then gov't best choice of pi is: pi=___
(2)Social loss is L=(u-5)^2+(pi-2)^2
Philips curve is u=6-(pi-pi_e), where pi is actual inflation rate, pi_e is expected inflation by the public.
If gov't is honest, then the smallest social loss possible is L=_____
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- Question 2:___________ inflation is caused by an increase in the cost of production, leading to higher prices for goods and services. This type of inflation can stem from various factors such as increases in labor costs, raw materials prices, or taxes. For example, if the price of oil rises significantly, it can lead to higher transportation and manufacturing costs, which in turn cause an increase in the prices of a wide range of goods and services.A) Demand-pullB) Cost-pushC) Built-inD) Stagflation Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.Suppose that people expect inflation to equal 5 percent, but in fact, prices rise by 7 percent. Which of the following groups or individuals are hurt by this unexpectedly high inflation rate? Check all that apply. The government A union worker in the second year of a labor contract A homeowner with a fixed-rate mortgage A college that has invested some of its endowment in government bonds that are not indexed Treasury bondsWith respect to the concept of inflation, it is correct to say that ________. options: A) inflation increases the purchasing power of consumer dollars. B) inflation and deflation are really almost synonymous in practice. C) the consumer price index is one way to measure inflation. D) inflation occurs when the amount of money taken out of the economy exceeds the amount of money put into the economy. E) inflation occurs when people have more money to spend as the quantity of goods available increases.
- Please see below. These are true or false questions. Need help with all of these please and thank you. T/F Questions. 1. The price level is measured by using a basket of goods and services and calculating how the nominal cost of buying that basket of goods will change over time. 2. The base year values of all price indices is always equal to 1. 3. The rate of inflation is measured as the percentage change between price levels or the values of a price index over time.Question 12 In answering the question, you should emphasize the line of reasoning that generated your results; it is not enough to list the results of the analysis. include correctly labeled diagrams. if useful or required in explaining your answer. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes Explain how some individuals are helped and others harmed by unanticipated inflation as they participate in the following events A Credit markets b. Labor markets c Product marketsConsider an economy that has a steady inflation rate of 1.5 percent per year. In such an economy, in how many years does a dollar lose half its value? (I would really appreciate a step by step, I genuinely want to learn how to calculate the problem)
- True or False? Inflation, which is a measure of annual change in the overall price level in an economy, must be a positive number (i.e., inflation cannot be negative). ??? True FalseGina loans George $1,000. George agrees to pay her $1,100 next year. They both expect an inflation rate of 4 percent. At the end of the year, the inflation rate turns out to be 5 percent. This unexpected change is Select one: a. good for Gina but bad for George. b. bad for both Gina and George. c. irrelevant, a deal is a deal. d. good for both George and Gina. e. good for George but bad for Gina.Suppose I lend my friend Peter $100 for one year, and he agrees to repay me with interest. We each have an expectation that the inflation rate over the coming year will be 5 percent, and so we agree that he will pay me back at a nominal rate of 7 percent interest. a) What real rate of return do I expect to receive? b) What happens if inflation turns out to be 8 percent over the year? Who is made better off and who is made worse off? c) What happens if inflation turns out to be 3 percent over the year? Who is made better off and who is made worse off?
- Oil prices are on track to reach $100 a barrel this month for the first time in 2023 after surging by almost 30% sinceJune, after Russian and Saudi Arabian production cuts and rising demand from China. What is one of the potential effects of the aforementioned inflation on the South African economy?A. Decreased purchasing power of money.B. Increased consumer savings.C. Reduced interest rates on loans.D. Higher demand for imports.Please just do question 4 please 3) Suppose that on January 1, 2019 a bank lends $20,000 to a person. The bank and the individual both agree that the real interest rate charged on the loan should be 10% and the loan is going to be totally paid ($20,000 plus interest), in a one-time payment, on December 31, 2020. Suppose the two parties to this transaction can perfectly foresee what the inflation rate for this period is going to be. Given this information, what is the nominal rate the Bank has to charge on this loan? Assume that the CPI is computed at the beginning of each year. According to US inflation data: The historical average CPI for 2019 is - 255.657 The historical average CPI for 2019 is - 258.811 The inflation rate during the period is: (258.811/255.657 -1) *100 = 1.233% Real Interest Rate = Nominal Interest Rate – Expected Inflation Nominal Interest Rate = Real Interest Rate+ Expected Inflation Nominal Interest Rate = 10% + 1.23% Nominal Interest Rate…Will the following lead to cost-push or demand-pull inflation? (5%)(a) The discovery of a large and rich vein of gold in the banks of Lagan (b) More militancy in wage demands by trades unions (c) A fall in output as a result of a prolonged lockdown of business while the government pays for salaries of furloughed workers (d) A higher tax on microchips (e) Increasing industrial concentration leading to oligopolistic industrial structures