ECON 103 Final: Graphs to Know

205 views5 pages

ceruleanyak165

9 Jun 2015

School

University of Illinois

Department

Economics

Course

ECON 103

Professor

Petry

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

Short- run phillips curve: shows the inverse relationship between unemployment rate and inflation rate. Represents the trade- off between inflation and unemployment. Long- run phillips curve: corresponds with the natural state of unemployment (no. Dependent: change in inflation rate. Unemployment rate, % d n u o p r e p s r a l l o d s d n u o. Factors that affect exchange rates. If the us has higher interest rates relative to britain, then british citizens will be attracted to us securities. If us inflation rates, or price levels, are heightened the us dollar will depreciate. This is the opposite effect of what has been depicted in red. v it is important to note that unless the. Federal reserve, or some equivalent, enact new policy the quantity of money will not change. Ae = (c + i + g + ex - im) Independent: aggregate expenditure (any component, for example a change in: dependent: income, y.

Related Questions

1) In 1958, A.W. Phillips stated that inflation and unemployment are correlated. In 1972, Milton Friedman stated that Phillips' relationship was only temporary, and thus only applicable in the short-run. Friedman contended that people will over time anticipate the correct value of inflation and in the meantime adjust their actions accordingly. These expectations mitigate policymakers' attempts to control unemployment through inflationary policies. Thus, Friedman believed that in the long-run, there is no relationship between inflation and unemployment. Friedman's analysis of inflation and unemployment is summarized by the following equation: equation, where a is a positive constant, and the natural rate of unemployment is the normal unemployment that an economy experiences because people are continually quitting and searching for jobs.

Which of the answer choices is Phillips' theory regarding inflation and unemployment?

A. More people working in an economy correlates to more expensive goods and services.

B. Fewer people looking for work in an economy correlates to cheaper goods and services.

C. More people looking for work in an economy correlates to more expensive goods and services.

D. Fewer people working in an economy correlates to more expensive goods and services.

2) At the end of 2014, the unemployment rate in the U.S. was 5%. The Federal Reserve has stated that it will conduct monetary policy to bring down this unemployment rate during 2015. Suppose that the natural rate of unemployment is 6%, the value of a is one, and the public expects inflation of 4%. According to the given information, which of the answer choices correctly gives values of actual inflation that would support Phillips's theory and Friedman's theory, respectively?

A. Phillips: 6%; Friedman: 5%

B. Phillips: 7%; Friedman: 6%

C. Phillips: 5%; Friedman: 2%

D. Phillips: 3%; Friedman: 4%

greenrhinoceros438

1) According to the Phillips curve :

a. there is a direct relationship between unemployment and inflation

b. there is an inverse relationship between unemployment and inflation

c. there is a direct relationship between income and unemployment

d. there is an inverse relationship between income and unemployment

e. there is a direct relationship between the money supply and inflation

2) which of the following believe that there is a Phillips curve trade-off in both the short run and the long run?

a. monetarists

b. rational expectations school

c. Keynesians

d. classical economist

e. methodists

3) Which of the following believe that there is a Phillips curve trade-off in the short run but not in the long run

a. Keynesians

b. rational expectations school

c. monetarists

d. Lithuanians

e. supply-siders

4) According to the Monetarists, the principal cause for the Phillips curve shifting to the right from the 1950s to the early 1980s was:

a. decreasing labor productivity

b. an increase in the inflationary expectation of labor

c. increase in the price of oil

d. increase in unemployment benefit

e. all of the above

5) According to the Keynesians, the reason why the Phillips curve shifted to the right from the 1950s to the early 1980s was :

a. an increase in the inflationary expectation of labor

b. "supply shocks" in the form of oil price increase

c. the changing composition of the labor force

d. all of the above

e. none of the above

skymuskrat620

For each of the following statements, specify whether a Keynesian, a monetarist, or a classical economist is most likely to support it, and explain in 1-2 sentences why. (Note: each economic view may be used more than once or not at all.

A) During a recession, government spending should be minimized. The Federal Reserve should focus on maintaining a constant growth in the money supply to help revive the economy.

B) Expansionary fiscal policy can help bring an economy out of a slump such as the Great Recession or Great Depression.

C) Markets should be left to correct themselves on their own, without any outside policy interventions.

D) Unemployment gravitates around a constant rate known as the Non-Accelerating Inflationary Rate of Unemployment, or NAIRU, implying a short-run trade-off between inflation and unemployment.

apricotdeer375

ECON 103 Final: Graphs to Know

Document Summary

Get access

Related Questions