Find the sensitivity of equilibrium inflation in the target

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Reference no: EM1346476

1. The U.S. beer industry:

a. has become monopolistically competitive as the result of new production technologies.

b. has evolved from monopolistic competition to oligopoly in the past 50 years.

c. is populated by hundreds of relatively large, independent brewers.

d. approximates the purely competitive market model.

2. Efficiency wages: Assume two identical economies with a production function Y = EN. "E" denotes the efficiency of labor. Labor supply is given by Ns = W/P . Suppose that in the "Economy I", E = 2+ (3/4)(W/P) . While in the "Economy II" E = 6. The output of economy I is _____units higher than the output in the economy II.

A. -28.

B. 28.

C. 36.

D. 64.

3. Consider the Dynamic AS/AD model from class. The economy is initially at its long-run equilibrium. The Federal Reserve Board is considerining changing its target inflation rate. However, they are concerned about the immediate effect on inflation. Find the sensitivity of equilibrium inflation to a change in the Fed's target inflation rate in the same time period.

A. 1+ (φ/ αθπ)

B. αθπ/(1+αθY)

C. 1 + ((1+αθY)/ αθπ)

D. αθπφ /(αθπ φ+1+αθY)

Reference no: EM1346476

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