Observations of inflation in the 1970s prompted what further addition to the Phillips curve? expected inflation price shocks personal consumption expenditures all of the above none of the above
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- Assume that inflation falls significantly below expectations. Diagramboth the short-run and long-run effects on employment using a PhillipsCurve diagram. What changes in this model to allow the return to long-runequilibrium?Using the Frieman-Phelps expectations-augmented Phillips curve, if actual and expected inflationare equal to each other, thenA)workers are correctly forecasting inflation and the economy is in long run equilibriumB)the policymaker needs to pursue expansionary policy to create more output.C)in the long run workers will adjust their expectations, resulting in a business cycle in the longrun.D)the economy is in an expansion above the natural rate of output.What kind of changesin the economy might infuence the slope of the Phillips curve?
- Describe the Phillips curve (O.G., not modified/expectations) and drawa graph of the relationship. How good was this model with 1960’s data vswith data from 1970-2000’s? Explain.. Explain how the original Phillips curve was transformed into the expectations augmented Phillips curve. Using the latter, describe why any expansionary policy would not be effective in the long run and move the macro-economy back to the Natural Rate of Unemployment (NRU).Derive the equation of Expectation Augmented Phillips curve using standard equation of Aggregate Supply (AS) and explain causes of inflation in terms of it. How does expectation augmented Phillips curve explain Stagflation?
- a) Are the effects of an increase in aggregate demand in the AD-AS model consistent with the Phillips curve? Explain. b. Discuss the factors determining the slope of the short-run Phillips curve. Is the linear shape appropriate? Why or why not?Using the inflation-unemployment version of the Phillips curve with adaptive expectations, ifaggregate demand increasesA)workers will realize that inflation has changed in the long run but not in the short run.B)the SRPC will immediately shift to the right as workers expect higher pricesC)workers will mistakenly work less, resulting in a decrease in inflation and increase inunemploymentD)actual inflation will be less than expected inflation, resulting in workers mistakenly workingmore and unemployment falling.If inflation expectations rise, the short-run Phillips curve shifts. Please answer correct explain please asap please. Don't answer by pen paper plz
- a) Explain the concept of the natural rate of unemployment using the expectations-augmented (modified or modern) Phillips curve model. b) Why is this model useful for policy-makers?Assume that inflation falls significantly below expectations. Diagram both the short-run and long-run effects on employment using a Phillips Curve diagram. What changes in this model to allow the return to longrun equilibrium?If inflationary expectations increase, the Phillips curve will A) become upward sloping B) shift to the right C) become vertical D) shift to the left
