Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Chapter 14, Problem 5QQ
To determine
The shift in the
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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.
th
aht
thanks
In theory, inflation not only ______ the value of consumers' money over time, but it also increases the ____ of producers over time.
a.Decreases, wages
b.Increases, interest rates
c.Decreases, unemployment
d.Increases, real GDP
Moving along the short-run Phillips curve, if ________ increases, then ________ decreases.
unemployment; the expected inflation rate
unemployment; the price level
inflation; the price level
inflation; real GDP
inflation; unemployment
According to Okun's Law, when the natural employment rate is 6 percent and potential GDP is $10 trillion, then when actual employment is 7 percent, real GDP is
$9.8 trillion.
$10.1 trillion.
$10.2 trillion.
$9.9 trillion.
$8 trillion.
The long-run Phillips curve shows the relationship between
inflation and interest rates at full employment.
aggregate demand and aggregate supply at full employment.
inflation and unemployment at full employment.
aggregate demand and interest rates at full employment.
the price level and real GDP when the economy is not at full employment.
If the expected inflation rate changes, the long-run Phillips curve ________, and the short-run Phillips curve ________.
does not shift; does not…
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- 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.arrow_forwardAn increase in worker productivity brought about by the introduction of new technology into the workplace willa. shift the long-run Phillips curve to the left.b. shift the long-run Phillips curve to the right.c. decrease aggregate demand, since workers will lose their jobs.d. cause the aggregate demand curve to become horizontal. Give proper explanations for the correct onearrow_forwardIf the actual unemployment rate falls below the natural unemployment rate, how does the actual inflation rate change? The actual inflation rate ________. A. doesn't change, but the short-run Phillips curve shifts leftward B. rises up along the short-run Phillips curve C. doesn't change, but the expected inflation rate rises D. rises and the natural unemployment rate fallsarrow_forward
- There are economists talking about the Phillips curve is a failure to predict the economy during the current pandemic . Which of the following statement about the Phillips curve is correct. O Phillips curve simply outlines the observation of a negative relationship between inflation and unemployment in data. The central banks should always design their policies according to the Phillips curve. Phillips curve predicts that high inflation leads to low unemployment rate. Phillips curve predicts that high unemployment rate cause low inflation.arrow_forwardHow does the money wage rate change along the Phillips curves? Along the short-run Phillips curve, the money wage rate _______, and along the long-run Phillips curve, the money wage rate _______. A. rises by the same percentage as the inflation rate; rises by the same percentage as the inflation rate B. is constant; is constant C. rises by the same percentage as the inflation rate; is constant D. is constant; rises by the same percentage as the inflation ratearrow_forwardEconomics Complete the graph Inflation rate Unemployment rate (percentage) 12 (percent per year) 4. 15 3 5 2 I FIGURE 15.1 1. The table above has data on the inflation rate and the unemployment rate. a. Using the data, label the axes and plot the short-run Phillips curve in Figure 15.1. Label the curve SRPC. b. What is the effect of a decrease in the unemployment rate from 8 percent to 5 percent? Show the effect in Figure 15.1. c. How does your answer to question (b) indicate the presence of a tradeoff?arrow_forward
- How does the money wage rate change along the Phillips curves? Along the short-run Phillips curve, the money wage rate _______, and along the long-run Phillips curve, the money wage rate _______. A. rises by the same percentage as the inflation rate; rises by the same percentage as the inflation rate B. is constant; is constant C. rises by the same percentage as the inflation rate; is constant D. is constant; rises by the same percentage as the inflation rate s thank s screenshot atttachedarrow_forwardTo say that the natural rate of unemployment changes over time is to say that a. the long-run Phillips curve shifts over time. b. the Federal Reserve influences the natural rate of unemployment over time. c. the aggregate demand curve shifts over time. d. the short-run Phillips curve shifts over time.arrow_forwardEverything else held constant a change in workers' expectations about inflation will cause to change. Select one: O a the production function b. aggregate demand Oc short-run aggregate supply O d.long-run aggregate supplyarrow_forward
- On a given short-run Phillips curve which of the following is held constant? a. the level of GDP b. employment c. the unemployment rate d. expected inflationarrow_forward1. Assume that in an economy the phillips curve is: At = -0,8 (U-Un) + p Last year's inflation was 0,08, current inflation is 0,08, unemployment rate is 0,04 and the price shock is 0,01. What is the natural rate of unemployment? 2. The price level is 143, the inflation rate is 0,08, the nominal money supply is 12785, the nominal interest rate is 0,13 percent. Calculate the seignorage.arrow_forwardSuppose that an economy has the Phillips curve π = π−1 − 0.5( u − 0.06). a. What is the natural rate of unemployment? b. Graph the short-run and long-run relationships between inflation and unemployment. c. How much cyclical unemployment is necessary to reduce inflation by 5 percentage points? Using Okun’s law, compute the sacrifice ratio. d. Inflation is running at 10 percent. The Fed wants to reduce it to 5 percent. Give two scenarios that will achieve that goal.arrow_forward
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