Critically discuss why oil price shocks in the US may have had different effectsin the 1970s versus the 2000s before the Financial Crisis. Use three-panelgraphs of the IS-LM-PC model and graphs of inflation over time to help explainyour answe

Critically discuss why oil price shocks in the US may have had different effectsin the 1970s versus the 2000s before the Financial Crisis. Use three-panelgraphs of the IS-LM-PC model and graphs of inflation over time to help explainyour answe

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 29CTQ: If, over time, wages and salaries on average rise at least as fast as inflation, why do people worry...

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Would you expect to see long-run data trace out a stable downward-sloping Phillips curve?
If, over time, wages and salaries on average rise at least as fast as inflation, why do people worry about how inflation affects incomes?
Suppose the public believes that a newly announcedanti-inflation program will work and so lowers itsexpectations of future inflation. What will happen toaggregate output and the inflation rate in the short run?
(c). Consider an economy that starts out in steady state when the central bank decides to make the inflation target more ambitious. Analyse the effects of a decrease in the inflation target from ? to ??. Explain the mechanisms behind the adjustment to the new steady state.
Determine the impact of an increase in inflation expectations on output and inflation in the short-run and long-run. (Use AS-AD-LRAS curves to illustrate your reasoning).
Assume, while an economy is in long-run equilibrium, an adverse supply shock occured, suchas energy prices have incrased. The central bank decides to accommodate this shock and restores theequilibrium quickly. What would be the effect of this policy action on inflation? Explain and illustratewith the help of an AD-AS diagram.
My question is (c). Basically, AS curve becoming steeper can be reflected by the value of v bar increases, showing that inflation is more sensitive to SR AD shock. However, this is no impact on AS shock theoretically, as AS shock relates to the change of o bar. So I guess maybe the provided solution is wrong, could u please check it for me? Thanks a lot!
Determine the impact of the each of following types of shocks on output and inflation in the short-run and long-run. (Use AS-AD-LRAS curves to illustrate your reasoning). A decline in consumer confidence. An increase in inflation expectations. An increase in export demand.
Consider an economy that starts out in steady state when the central bank decides to make the inflation target more ambitious. Analyse the effects of a decrease in the inflation target from ? to . Explain the mechanisms behind the adjustment to the new steady state.
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Provide two examples of people or institutions that are negatively affected by unexpected inflation and explain why they are negativelyaffected. Now provide two examples of people or institutions that are positively affected by unexpected inflation and explain why they arepositively affected. In addition, what measures have the government used to insulate Social Security recipients from inflation? Explaincaảefully.