Assume okuns law holds also a one percent

Assignment Help Business Economics
Reference no: EM1319135

Q. Consider an economy in long-run equilibrium with an inflation rate (π) of 0.08 per year also a natural unemployment rate of 0.05. Assume Okun's law holds also a one percent (%)age point rise in the unemployment rate reduces real output by 2% of full-employment output. The expectations-augmented Phillips curve is given by π=πe -2.5(u-0.05). Consider a two-year disinflation. In the first year, π = 0.06 also π e = 0.08. In the second year, π = 0.04 also πe =0.05.

(a) In the first year Illustrate what is the value of the unemployment rate?

(b) In the first year, by Illustrate what percent (%)age does output fall short of full employment output?

(c) In the second year Illustrate what is the value of the unemployment rate?

(d) In the second year, by Illustrate what percent (%)age does output fall short of full-employment output?

(e) Illustrate what is the sacrifice ratio for this disinflation?

Reference no: EM1319135

Calcualting the variance and standard deviation

Virgil is evaluating an investement that has a 15% chance of losing $10,000, a 50% chance of breaking even, a 30% chance of making $80,000 and a 5% chance of making $400,000.

Write down equation for market demand for hamburgers

Bill’s demand for hamburgers (a private good) is Q = 21 − 6P and Ted’s demand is Q = 6 − 3P. Write down an equation for market demand for hamburgers. Now suppose that hamburge

About the price discrimination strategies implemented

On the below case study about the Price Discrimination strategies implemented by Sam's Club, CVS and others. Explain briefly how this is an improvement over the generic use of

Described in the fair trade material play an important role

Explain why non-governmental organizations (NGOs) like the cooperatives described in the Fair Trade material play an important role in the economic development of developing c

Understand the two components of the demand for money

Understand why depositing cash on a checking account does not affect money supply immediately. Understand why when a commercial bank buys government securities from its client

The natural unemployment rate

Suppose we pursued a policy that made it more difficult for firms to fire their workers (e.g. mandatory severance packages, long notice time, burdensome paperwork, or prior go

Economic concepts of scarcity-unemployment-inefficiency

Use the graph to illustrate the economic concepts of scarcity, unemployment, inefficiency, and opportunity costs. When possible, use data points on the graph to accompany your

What is the future worth of this investment

Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $18,500 per year. An emission reduction filter will cost $75,000 an


Write a Review

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