The Fed chairman pursued aggressive policies to tackle the problem of unemployment. As a consequence the output gap rose by 15% in year one but dropped by 3% in year two. However, the inflation in these two years rose from was 2% to 6% in two years. (a) Calculate the sacrifice ratio (b) Calculate the impact on unemployment

The Fed chairman pursued aggressive policies to tackle the problem of unemployment. As a consequence the output gap rose by 15% in year one but dropped by 3% in year two. However, the inflation in these two years rose from was 2% to 6% in two years. (a) Calculate the sacrifice ratio (b) Calculate the impact on unemployment

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter17: The Philips Curve And Expetactions Theory

Section17.3: The Theory Of Rational Expectations

Problem 1YTE

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