If firms and workers have adaptive expectations, an expansionary monetary policy will cause the short-run equilibrium to move from OA. point A to point B. OB. point C' to point B. OC. point A to point C. OD. point B to point C. OE point B to point A. 8- 7- Y Y Inflation rate (% per year) + ले 1- 0- 0 4.8 T 1 B Long-run Phillips curve с Short-run Phillips curve 7 5 8 Unemployment rate (%) 8

If firms and workers have adaptive expectations, an expansionary monetary policy will cause the short-run equilibrium to move from OA. point A to point B. OB. point C' to point B. OC. point A to point C. OD. point B to point C. OE point B to point A. 8- 7- Y Y Inflation rate (% per year) + ले 1- 0- 0 4.8 T 1 B Long-run Phillips curve с Short-run Phillips curve 7 5 8 Unemployment rate (%) 8

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.7P

See similar textbooks

Similar questions

Please no written by hand solution Consider a scenario of a closed economy in the short run where price level is fixed. Assume that bothtaxes and money supply increase in a way that keep output constant in equilibrium (suppose that themarginal propensity to consume is less than one). Which of the following may result from the policychange?a) It will lead to an increase in investment but a decrease in consumption.b) It will result in an increase in investment but a decrease in government spending.c) It will lead to an increase in investment and private saving.d) It will decrease investment but increase in public saving.
Consider the market for loanable funds. Suppose the demand for loans is given by i 100-30+, and the supply of loans is given by i= -20+Q+m, where represents inflation. In the case of m=5, what is the equilbrium quantity of loans and what is the corresponsing interest rate? O Q*=30,1"=5 ⒸQ=30,1" 15 O Q=35,1"=10 O Q*35, 1-2 An example of an adverse selection problem in the context of obtaining a loan would be Those individuals who are more likely to default turn out to be first in line for a loan, while the most trustworthy individuals select themselves out of the market for a loan. An untrustworthy person who decides to save money at a specific bank. O An untrustworthy individual who offers to lend money to a bank. A potential borrower not disclosing information conerning the risk or their project which would have otherwise lead the bank to not lend the money. Consider the market for loanable funds. Suppose the demand for loans is given by i= 100-30+, and the supply of loans is given by…
Everything else held constant when financial frictions increase, the real cost of borrowing. so that planned investment spending at any given inflation rate. Select one: Oa. increases; falls O b. decreases: falls, Oc. decreases; rises O d.increases: rises
Suppose firms become optimistic about futurebusiness conditions and invest heavily in new capitalequipment.a. Draw an aggregate-demand/aggregate-supplydiagram to show the short-run effect of thisoptimism on the economy. Label the new levels ofprices and real output. Explain in words why theaggregate quantity of output supplied changes.b. Now use the diagram from part (a) to show thenew long-run equilibrium of the economy. (Fornow, assume there is no change in the long-runaggregate-supply curve.) Explain in words whythe aggregate quantity of output demanded changesbetween the short run and the long run.c. How might the investment boom affect thelong-run aggregate-supply curve? Explain.
IM IN %24 3. O Completed 15 out of 20 Submit All Question 7 of 20 Suppose that employment processes change so that more human capital is required for a given task. The əsoddng for human capital will shift right, and the rate of return will O demand; increase supply; decrease O demand; decrease O supply; increase Show all 5:20 PM search 78°F ENG 12/9/2021 ins prt sc delete end 61 144 114 04 米 backspace lock 4. home enter 1 shift end 1413
Soved 6. 00:54:01 01234 5 67 89 Unemployment rate (%) Refer to the above diagram for a specific economy. The shape of this curve suggests that Rate of inflation (%) 7956 321
a-bR,-r)f there is no demand shock and if b 2 and X=0.5, a 1 percent increase in the real interest Consider the IS curve 1-X rate will cause short-run output to OA. fall by 4 percent. OB. fall by 2 percent. OC. fall by 0.5 percent. OD.rise by 2 percent. O E. rise by 4 percent. LG U.S.ARMY 1HARINA BUBE
In a particular economy the real money demand function is Real Interest Rate, r (%) 0.451 M 0.40- 3,000 + 0.10Y-9,000i. P 0.35- Assume that M = 7,000 and P = 2. Initially, expected inflation, zewas 0.02. Initially, when Y= 8000, the real interest rate of 0.013 cleared the asset market and when Y = 9000, the real interest rate of 0.024 cleared the asset market. The initial LM curve is drawn as 0.30- 0.25 0.20- LM,. 0.15- Now suppose that the expected inflation rate increases to 0.03. Using the new expected inflation rate, calculate the real interest rate that clears the asset market when Y = 8000. (Enter your answer in decimals, rounded to three decimals.) D. This is point C. 0.10- LM, 0.05- 0.00+ 7 8 10 Output, Y (thousands)
Question 67 A prolonged period in which investment prices fall and usually occur when the economy is in a recession and unemployment is high, is O a Bull Market O a Bear Market O 52 Week Low Poison Pill
Consider the market for loanable funds. Suppose the demand for loans is given by i= 100-3Q+π, and the supply of loans is given by i= -20+Q+, where π represents inflation. In the case of T-5, what is the equilbrium quantity of loans and what is the corresponsing interest rate? O Q*=30, i*=5 O Q*=30, i*=15 O Q*=35, i*=10 O Q*=35, i*=2
Between a trough and a peak, the economy goes through a(n) Ohyperinflation. Obust. Orecession. O expansion. QUESTION 16 A period when the economy shrinks is known as O a recession. O a contraction. O a slump. O All of these. QUESTION 17 Dean borrows $400 from Tim. Tim wants to make a 10% real return on his money, so they both agree on a 10% interest rate paid next year. Dean and Tim did not anticipate any inflation, yet the actual inflation turned out to be 4% next year. In this case, O Dean is better off. O Tim will receive more than 10% of real rate of return a year from now. O Dean will pay $56 a year from now on. Tim is better off.
QUESTION 8 If expected inflation is 3%, then the real interest rate is O A. 3% B. 0% O C. 1% O D. There is not enough information to answer this question