EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 36, Problem 3DQ
To determine
Phillips curve in the short run and the long run.
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Suppose that the Phillip's curve and Okun's law are given, respectively, by
n=n² - (U-U")
and
U-U^----(Y-P²)
where is expected inflation, U" is the natural rate of unemployment, and Y is potential output. Supposing that = 22, U" =4, and Y² = 24, solve for the aggregate supply curve.
O
O
O
17--2
10+
1
x=10+ - Y
=10--Y
- 12/1
Question Completion Status:
A Moving to another question will save this response.
estion 15
Phillips Curve shows possible combinations of the
Unemployment rate
inflation rate
Wage Rate
Income Level
A Moving to another question will save this response.
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QUESTION 43
If the population of a country is 1,000,000 people, its labor force consists of 500,000, and 40,000 people are unemployed, the
unemployment rate is:
O 50.0 percent.
8.0 percent.
7.4 percent.
4.0 percent.
QUESTION 44
Inflation is defined as:
The level of prices at full-employment.
An increase in the price of expensive items, such as cars.
An increase in the average level of prices.
An increase in relative prices.
QUESTION 45
Over time, U.S. real GDP has increased:
By small, constant increments.
At a constant geometric rate.
At an average rate of 3 percent per year.
At an average rate of 7 percent per year.
Chapter 36 Solutions
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- Suppose that the actual unemployment rate in a country is 7.7 percent. If the country's frictional unemployment rate is 3.5 percent and its structural unemployment rate is 1.1 percent, what is its cyclical unemployment rate? O 11.7 percent O 3.1 percent O 5.3 percent O 4.1 percent ۵arrow_forwardMoving to another question will save this response. estion 10 Cold Turkey policy is believed to be the most inefficient anti-inflation policy. TRUE or FALSe? O TRUE FALSE Moving to another question will save this response. #bike 2 bike 2.jpg bike.jpg 101°F Sunny esc fi # 3 14 ID LA 4 % LO 5 6arrow_forwardIn an economy with high unemployment, the central bank has room to decrease the interest rate. Policy makers might consider lowering interest rates if the current rate of unemployment is V the natural rate of unemployment. All of the following are factors that could hinder the effectiveness of decreasing the interest rate in the face of an unemployment rate significantly higher than the natural rate of unemployment except O A. long term rates that closely follow short term rates. O B. interest rates near zero. O c. projected prolonged effect on the J-curve. O D. large diversity econometric predictions.arrow_forward
- 4. LO 4 In Figure 3.11, after the 1981-1982 reces- sion, does the price level appear to be procyclical, countercylical, or acyclical? Why is this important?arrow_forwardInflation VPC Y = £200 billion Output Figure 12 Current and equilibrium output In Figure 12 the economy's current output is £200 billion and the equilibrium level of output is shown by the position of the Vertical Phillips Curve (VPC). Which of the following policies could be adopted to achieve a zero output gap? (Choose one or more answers.) Select one or more: O A. An increase in income tax. O B. A quantitative easing initiative. O C. An increase in interest rates. O D. A cut in Value Added Tax. MacBook DII DD F9 000 000 F8 F7 F6 F4 F5arrow_forwardUsing the Taylor Rule, if the inflation rate is 2.5%, Equilibrium Real Federal Fund Rate is 2% and output gap is zero, the real neutral federal fund rate is.. . O 4.75% O 2.25 % O 2.5% O 4.5%arrow_forward
- Which of the following statements is TRUE regarding the Fisher Effect? O A. The Fisher Effect illustrates the inverse relationship between inflation and nominal interest rates. O B. Nominal interest rates are directly related to expected inflation in part because borrowers want to protect their purchasing power reward from being wiped out by lower inflation. O c. If prices rise by 7% and your salary increases by 9%, you will experience a gain of purchasing power. O D. Ceteris paribus, the higher the inflation, the higher the real interest rate.arrow_forwardRemaining Time: 16 minutes, 20 seconds. Question Completion Status: A Moving to another question will save this response. Question 15 Phillips Curve shows possible combinations of the Unemployment rate inflation rate Wage Rate Income Level bike.jpg * 3 Sc bike 2.jpg 96°F Clear 1 ? Q f2 @ 2 34 # E f4 0 $ 4 and the % R bike 2 LO 5 40 T [Select ALL that apply] 6 G & bike jpg. ❖ 7 Yarrow_forwardd. A decrease in aggregate demand. e. An increase in aggregate demand that exceeds an increase in aggrega supply.arrow_forward
- Discuss the following statements: a. The Keynesian multiplier is higher the higher is the degree of openness of the economy'. b. 'There is no easy policy answer when it comes to dealing with a negative supply shock'. Consider the following economy. The production function is F(K,L) = K0.3 Lº.7. The saving rate and the depreciation rate are respectively: s = 0.10 and 8 = 0.07. Population growth is 1%, i.e. n = 0.01. c. Derive the capital accumulation equation for this economy. d. Find the steady state value of the capital stock per capita. e. Suppose that the initial capital stock per capita is: k = 1.5. Discuss the process of convergence of the economy to the steady state using the appropriate diagram. f. Calculate the optimal saving rate of the economy and discuss whether the economy at the steady state over or under-accumulates capital.arrow_forward3. The long-run effects of monetary policy The following graphs plot the long-run equilibrium situation for an economy. The first graph plots the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second graph plots the long-run and short-run Phillips curves (LAPC and SRPC, respectively). PRICE LEVEL 1 LRAS 3 OUTPUT (Trillions of dollars) AD AD 10 LRAS (?)arrow_forwardRate Inflation 7 6 5 4 N 1 0 -1 -2 -3 0 De graph below depicts a short-run Phillips Curve. Move the line as needed to depict a long-run Phillips curve, then answer the question to the right. O 1 2 3 4 5 6 7 Unemployment Rate 8 9 10 The relationship between inflation and unemployment in the short run is different from their relationship in the long run. Which of the following is an important factor in that difference? Inflation Expectations Tax Rates Price Levels Okun's Lawarrow_forward
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