+1-415-315-9853

info@mywordsolution.com

## Economics

 Basic Economics Macroeconomics Microeconomics Business Economics Econometrics International Economics Managerial Economics Game Theory Public Economics

Consider an economy in long-run equilibrium with an inflation rate, π, of 12% (0.12) per year and a natural unemployment rate, u, of 6% (0.06). The expectations-augmented Phillips curve is
π = π^e - 2(u - u).

Assume that Okun's law holds so that a 1 percentage point increase in the unemployment rate maintained for one year reduces GDP by 2% of full-employment output.

a) Consider two-year disinflation. In the first year π = 0.04 and π^e = 0.08. In the second year π = 0.04 and π^e = 0.04. In the first year, what is the unemployment rate? By what percentage does output fall short of full-employment output? In the second year, what is the unemployment rate? By what percentage does output fall short of full-employment output? What is the sacrifice ratio for this disinflation?

b) Now consider a four-year disinflation according to the following table:

Year 1 2 3 4
π 0.08 0.04 0.04 0.04
π^e 0.10 0.08 0.06 0.04

What is the unemployment rate in each of the four years? By what percentage does output fall short of full-employment output each year? What is the sacrifice ratio for this disinflation?

Microeconomics, Economics

• Category:- Microeconomics
• Reference No.:- M945684

Have any Question?

## Related Questions in Microeconomics

### Question 1which of the following has not been identified as

Question 1 Which of the following has NOT been identified as a basic consumer right? Consumers have a right to safe products. Consumers have a right to collude. Consumers have a right to be informed about a product. Cons ...

### Economic term paperempirical project the research project

Economic Term Paper Empirical Project The research project should be about 10 pages and should explain your data collection, model, and findings. The project (due by the final exam date) is worth 30% of your final grade. ...

### Three paragarphs economicswrite 3 paragraphs answering the

Three paragarphs Economics Write 3 paragraphs answering the following questions: 1. How does each of the following relate to the financial crisis of 2007-2008: declines in real estate values, sub-prime mortgage loans, an ...

### Instruction please answer all questions all questions carry

Instruction: Please answer ALL questions. All questions carry equal marks. Please do not write over 2000 words for the entire assignment. 1. a. Using the graph shown, analyze the effect a \$300 price ceiling would have on ...

### Project-listen to this video asafter you work on your graph

Project- Listen to this video as/after you work on your graph. The lecture is on the 'Aftermath of the Financial Crisis' given by Ben Bernanke in March 29 th 2012. https://www.c-span.org/video/?305198-1/ben-bernanke-lect ...

### The purpose of an assignment is to ensure that the learner

The purpose of an assignment is to ensure that the Learner is able to: - Use methods of enquiry and research in a disciplined field. - Interpret and evaluate text. - Have a sound understanding of key principles and theor ...

### Suppose the economy was at equilibrium before the start of

Suppose the economy was at equilibrium before the start of the recession. Show this using the IS-LM, Keynesian cross, AD-SRAS-LRAS and money market spaces. Following the start of the recession, what happened to aggregate ...

### Microeconomicswatch this 30 mins youtube link on how the

Microeconomics Watch this 30 mins. YouTube link on 'How The Economic Machine Works' You will enjoy it! https://youtu.be/PHe0bXAIuk0 Write down your understanding of 'How The Economic Machine Works' and make sure to suppo ...

### 1 this question is for discussion in teamsas the semester

1. This question is for discussion in teams. As the semester progresses. we will discuss these issues in class. Visit The World Factbook at https://www.cia.govlibrarypublications:The-world-factbook'. In "Please select a ...

### Assignmentthe paper is on googles business ethics in the

Assignment The paper is on Google's Business Ethics in the area of Sustainability. How does Google contribute or detract from various aspects of sustainability? Sustainable businesses make products and services which fil ...

• 4,153,160 Questions Asked
• 13,132 Experts
• 2,558,936 Questions Answered

## Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

### WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

### Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

### Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

### Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

### Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro