What will be the inflation rate un the given year

Assignment Help Microeconomics

Reference no: EM132136797

Question: A country's economy is described in Table 2. Using information in Table 2, answer questions (2.1), (2.2), (2.3) and (2.4)

Phillips curve p -p-1=-0.55x( U-Un)

Natural rate of unemployment uN = 5%

Previous year's (2006) inflation rate 1 p - = 2%

(2.1) Suppose the government of the country decides to use policies to bring the country's actual unemployment rate to 4%. What will be this country's inflation rate p this year (2007)? Show both steps and answer.

(2.2) Compare this and previous year's inflation rate, is inflation accelerating or not? It will be accelerating if this year's inflation is higher than previous year's.

(2.3) Since inflation represents increase in price level, higher inflation rate this year than previous year means much higher price level this year. How can you explain why inflation accelerates when the government try to bring down unemployment?

(2.4) What will be the inflation rate in year 2008?

Reference no: EM132136797

Questions Cloud

Evaluate the personal characteristic or societal cause : A variety of individual causes of juvenile delinquency have been presented in the lesson and readings this week.

Examples from your own employment experiences of companies : Give examples from your own employment experiences of companies' respecting the rights of employees and of companies' failing to do so.

Identify three different types or categories of law : Various categories or types of law exist within the United States. Identify and define three different types or categories of law.

What would be the market price of a five-year bond : If these bonds come in $1,000 maturity value per bond, what would be the market price of a five-year bond that pays $40 interest every half-year

What will be the inflation rate un the given year : Suppose the government of the country decides to use policies to bring the country's actual unemployment rate to 4%. What will be this country's inflation rate.

Create human resource report : Create a Human resource report that outlines how to deal with this specific topic for company Maruti Suzuki,

Analyze the use of all phases of emergency management : Analyze the use of all phases of emergency management (mitigation, preparedness, response, and recovery, and the subcomponents found in each phase).

What would be the new steady state levels : If the saving rate (s) increased from 0.1 to 0.2, (other parameters remaining unchanged) what would be the new steady state levels of K/N and Y/N?

Explain why you either support or disapprove of unions : Explain why you either support or disapprove of unions. Do you believe Unions are still relevant today? Why or why not?

User Account

All Pages