The long-run Phillips curve in inflation/unemployment space 3) A) is vertical at the natural rate of unemployment B) is upward-sloping due to the positive relationship between inflation and unemployment. C) is horizontal at the natural rate of inflation. D) is downward-sloping since the natural rate of unemploymenti increases as inflation falls

The long-run Phillips curve in inflation/unemployment space 3) A) is vertical at the natural rate of unemployment B) is upward-sloping due to the positive relationship between inflation and unemployment. C) is horizontal at the natural rate of inflation. D) is downward-sloping since the natural rate of unemploymenti increases as inflation falls

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter16: Macro Policy Debate: Active Or Passive?

Section: Chapter Questions

Problem 4.5P

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. Assume that the economy experiences no change in productivity, money demand or its natural rate of unemployment in either the short or long run. The inflation rate responds immediately to correspond to the money supply growth rate. However, wage inflation adjusts to changes in the inflation rate with a time lag. Draw a diagram with inflation on the vertical axis and the unemployment rate on the horizontal axis that illustrates the Phillips curve relationship in the short run. Label the curve as PC1. Mark a point N on the horizontal axis that represents the natural rate of unemployment
The positive relationship between inflation and unemployment in the Philips curve comes from that: Answers: A. Firms has adaptive expectation. B. Job searchers overestimate the future inflation. C. Firms have no expectation. D. Job searchers underestimate the future inflation
Consider the Phillips Curve shown in Figure 1. The current inflation rate is I%, and the current unemployment rate is U%. Suppose the inflation rate suddenly falls by half. How will this inflation drop affect the unemployment rate in the short run? A) The unemployment rate will decrease. B) The unemployment rate will increase. C) The unemployment rate will not change. D) Impossible to say.
Consider the Phillips Curve shown in Figure 1. The current inflation rate is I%, and the current unemployment rate is U%. Suppose the inflation rate suddenly doubles. How will this inflation jump affect the unemployment rate in the short run? A) The unemployment rate will decrease. B) The unemployment rate will increase. C) The unemployment rate will not change. D) Impossible to say.
Do the expected inflation rate and natural unemployment rate remain constant along the short-run Phillips curve? Along the short-run Phillips curve, _______. A. the expected inflation rate rises as the natural unemployment rate rises B. the expected inflation rate is constant and the natural unemployment rate varies C. the expected inflation rate and the natural unemployment rate are constant D. the expected inflation rate rises as the natural unemployment rate falls thank ss
For a number of years Canada and many European countries have had higher average unemployment rates than the United States. The Phillips curve suggests that these countries a. have higher average inflation rates than the United States. b. have long-run Phillips curves to the right of the United States’. c. may have less generous unemployment compensation or lower minimum wages. d. All of the above are consistent with the evidence on unemployment rates.
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.
Question 30 The short-run Phillips curve is based on the assumption that there is_____. no relationship between the inflation and unemployment a direct relationship between the inflation and unemployment an inverse relationship between the inflation and unemployment a trade-off between the output and unemployment
Suppose that the natural unemployment rate is 7 percent and the expected inflation rate in 2017 is 3 percent a year. If the inflation rate is expected to rise to 5 percent a year in 2018, explain how the short-run and the long-run Phillips curves will change.
What is true along the long-run Phillips curve? A. A labor shortage exists. B. A tradeoff exists between the inflation rate and the unemployment rate. C. The economy is at full employment. D. The inflation rate equals the expected inflation rate and any unemployment rate is possible.
The corresponding table includes a breakdown including Inflation Rate, Unemployment Rate, Price Level, and Real GDP. Using the data below, plot the graphs: Plot the short-run Phillips curve and the aggregate supply curve on separate graphs. Plot the long-run Phillips curve on a separate graph, when the natural unemployment rate is 6%. Inflation Rate Unemployment Rate Price Level Real GDP 2% 7% 104 9.8 3% 6% 103 10.0 4% 5% 102 10.2
Since the short-run Philips curve is downward sloping and the long-run Phillips curve is vertical there can never be simultaneous unemployment inflation TRUE / FALSE