tailieunhanh - Chapter 35: The short run trade off between inflation and unemployment

Tài liệu "Chapter 35: The short run trade off between inflation and unemployment" giới thiệu đến các bạn những câu hỏi bài tập bằng tiếng Anh về sự cân bằng giữa lạm phát và thất nghiệp. Hy vọng tài liệu sẽ giúp các bạn tự tin hơn trong kỳ thi sắp tới. | Suppose that the Prime Minister and Parliament of Veridian are disappointed with the high inflation rates under the current system where the Veridian Ministry of Finance is in charge of the money supply. They make reforms to lower inflation from its current rate of 8%. Suppose further that the public is confident that with the reforms in place that inflation will fall to 2%. Also suppose that those in control of the money supply actually conduct monetary policy so that the actual inflation rate is 4%. Using long-run and short-run Phillips curves and assuming the natural rate of unemployment is 6%, show the initial long run equilibrium of Veridian and label it “A”. Assuming that the government had actually set inflation at 2% and that the public believed this, label the long-run equilibrium “B”. Now, suppose that inflation expectations fell to 2% and that the government unexpectedly created inflation of 4%. Show the short-run equilibrium and label it “C”. If the money supply continues to grow at a rate consistent with 4% inflation, show where the economy ends up and label that point “D”.