Inflation debate. The Federal Reserve and Congress both responded to the COVID pandemic in an attempt to boost output. Some economists are worried that the most recent fiscal policy implemented by Congress will lead to increases in inflation. (a) Illustrate how the impacts of COVID and the responses of the Fed and Congress could cause inflation to increase using the IS-MP and Phillips graphs. Label as much as possible. (b) Explain your graphs in words

Inflation debate. The Federal Reserve and Congress both responded to the COVID pandemic in an attempt to boost output. Some economists are worried that the most recent fiscal policy implemented by Congress will lead to increases in inflation. (a) Illustrate how the impacts of COVID and the responses of the Fed and Congress could cause inflation to increase using the IS-MP and Phillips graphs. Label as much as possible. (b) Explain your graphs in words

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 19E

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Consider the Phillips curves depicted in the graph above. The Fed announces its intention to decrease inflation from 10 percent to 5 percent per year, and it succeeds. If expectations of inflation are not altered by the Fed's announcement, the rate of unemployment will be ________ in the short run. a)less than 5.5 percent b)5.5 percent c)between 5.5 and 7.5 percent d)7.5 percent
In the decade through 2020, inflation was consistently low. If people adjusted their inflation expectations to their actual inflation experience, this would shift the short-run Phillips curve down. shift the short-run Phillips curve up. shift the long-run Phillips curve to the left. Shift the long-run Phillips curve to the right.
There is no long-run trade-off between inflation and output because: Group of answer choices monetary policy makers will have adequately controlled unexpected inflation in the long run. fiscal policy makers will have adequately controlled unexpected inflation in the long run. in the short run, output and unemployment are not related. allowing inflation doesn't lead to sustainably higher output.
Explain all options, please. The modern view of the Phillips curve suggests that a.when inflation is less than anticipated, unemployment will fall below the natural rate. b.when inflation is steady, actual unemployment will equal the natural rate of unemployment. c.systematic demand stimulus policies will be unable to affect prices in the long run. d.there will be a trade-off between inflation and unemployment in the long run.
Go to the website of Statistics Canada www statcan ca For each Go to the website of Statistics Canada (www.statcan.ca). For each of the past five years, find the inflation rate as measured by the consumer price index (all items)—sometimes called head-line inflation —and as measured by the CPI excluding food and energy—sometimes called core inflation. Compare these two measures of inflation. Why might they be different? What might the difference tell you about shifts in the aggregate supply curve and in the short-run Phillips curve? Go to the website of Statistics Canada www statcan ca For each
Please choose between the options for each sentence correctly!! The Swedish central bank, Swede Bank, currently has an inflation rate target of 2%. Inflation in the past few years has been lower than this (and is currently below this), so the population is expecting the Swede Bank to undertake policies to boost inflation.These expectations will cause the SRAS to (shift upward, shift downward, remain unchanged) (it is a movement along the curve change ambiguously), the LRAS to (shift upward, shift downward, remain unchanged (it is a movement along the curve) change ambiguously), the short-run Phillips curve to (shift upward, shift downward, remain unchanged) (it is a movement along the curve) change ambiguously), and the long-run Phillips curve to (shift upward ,shift downward, remain unchanged (it is a movement along the curve)change ambiguously).
In the early-1970s, changes in oil prices greatly affected U.S. inflation. When oil prices rose, the U.S. experienced Multiple Choice cost-push inflation and rising output. demand-pull inflation and rising output. cost-push inflation and falling output. demand-pull inflation and falling output..
The Phillips curve in Lowland takes the form of π = 0.04 – 0.5 (u – 0.05), where π is the actual inflation rate and u is the unemployment rate. The Phillips curve in Highland takes the form of π = 0.08 – 0.5 (u – 0.05). The current unemployment rate in both countries is 9 percent (0.09). Explain the similarities in the Phillips curves in Highland and in Lowland.
The Phillips curve is A. a positive relationship between price stability and constant, small-increment changes in the fiscal policy on the part of the Fed. B. a positive relationship in the long run between the rate of inflation and the rate of unemployment. C. a negative relationship between the inflation rate and the unemployment rate, at least in the short run. D. a positive relationship between the unemployment rate and the real Gross Domestic Product (GDP) level.