Natural rate of unemployment

Assignment Help Business Economics
Reference no: EM132608409

Consider an economy with SRAS curve: Y = Ybar + a(P - EP)

Where Ybar is the natural rate of output and EP is the expected price level.

a) Depict a long run equilibrium of the closed economy AD-AS on a graph with Y on the horizontal axis and P on the vertical axis. Show the short run effects of a negative aggregate demand shock. Give one example of such a shock. Label your graph well. You don't need to solve for numbers in parts a) and b) of this question.

b) Carefully show how the economy will return to a new long run equilibrium in the absence of fiscal or monetary policy after the shock in part a).

c) Okun's Law states that:

u - ubar = -b(Y - Ybar)

Where ubar is the natural rate of unemployment. Derive the Phillips Curve. Is there a permanent trade-off between inflation and unemployment that policy makers can exploit? Discuss the role of expectations.

d) Consider two aggregate supply curves. The first has a slope of a = 2 and the second has a slope of a'=1. Which supply curve do you think is associated with "stickier" prices?

Reference no: EM132608409

Questions Cloud

How does the unemployment rate compare : When the equilibrium real GDP is below potential GDP, how does the unemployment rate compare with the natural rate of unemployment?
How each component contributes to the imc : An increasing trend in marketing communications is to use "content marketing." Discuss the components of content marketing described in the article.
Example of a good or service with inelastic demand : Provide an example of a good or service with inelastic demand and another good or service with elastic demand
Calculate the contribution margin variance : Calculate the contribution margin variance. Nanerty Inc. produces two types of backpacks: basic and deluxe. The basic backpack sells for $25 and the deluxe sell
Natural rate of unemployment : Consider an economy with SRAS curve: Y = Ybar + a(P - EP) Where Ybar is the natural rate of output and EP is the expected price level.
How much must Partner B report in his income tax return : Partner B earns $57,000, but withdraws only $49,000. How much must Partner B report in his income tax return as income
Describe how the success of a pr campaign can be measured : Evaluate how the success of a PR campaign can be measured. Support your position. Incorporate concepts and examples from this week's lecture in your post.
How do calculate income statement using marginal costing : How to Reconcile profits between marginal costing and absorption costing. How do calculate income statement using marginal costing
Spending result in medical facilities : But what about demand for services that retired people need, such as medical care? Won't that spending result in medical facilities

Reviews

Write a Review

Business Economics Questions & Answers

  Percentage of underweight children number of countries

What is the best estimate for the mean percentage of underweight children? (Round your answer to two decimal places.)

  How much are the trademark licensing rights worth

When the colts won the super bowl the demand for peyton manning's jersey was: P = 210 - 0.002Q with a corresponding marginal revenue of: MR = 210 - 0.0004Q IF the marginal cost of producing a jersey is $10, how much are the trademark licensing rig..

  Measures can government put into place to solve

What measures can government put into place to solve this situation.

  How much do consumers pay for a kilogram of coffee

If the tariff is imposed, how much will consumers pay for a kilogram of coffee? What is the quantity demanded?

  United states progress in the future

How should labor relations in the United States progress in the future? What should the future of labor unions look like?

  What prices will they choose in the stage nash equilibrium

Two firms are playing an infinitely repeated Bertrand game, each with the same marginal cost 20. The market demand function is given by P=150-Q. In the stage game (only one period), if the firms collude with each other, then what prices will they cho..

  Castorian airline market there are only two firms

In the Castorian Airline market there are only two firms. Each firm is deciding whether to offer a frequent flyer program.

  Find the most favorite newspaper

Select a stratified sample by sex of size 5. For each stratum, use the same set of random numbers to find the most favorite newspaper.

  Communication plan into paper

Review the below fake business scenario and do the following bullets . Also fit attached communication plan into paper

  What is the annual equivalent cost of replacing the vehicle

What is the annual equivalent cost of replacing the vehicle every 5 years? Assume your cost of capital is 5.1%. Enter your answer to the nearest cent.

  Discuss the importance of opinion leaders in marketing

Discuss the importance of opinion leaders in marketing and how they can influence the success of a product or service. Identify two opinion leaders and explain and justify your choices.

  1nbspnbspnbspnbspnbsp production possibility frontiers

1.nbspnbspnbspnbspnbsp production possibility frontiers studying or socializing?nbspa. nbspdraw a production

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd