If the Federal Reserve wants to reduce inflation from 4 percent to 3 percent permanently, how can that goal be achieved, and what impact will that have on employment in the short run and the long run? Support your answer with a graph of the Phillips
curve in the short run and the long run.
If the Fed wants to reduce inflation, it must implement a contractionary monetary policy and make it credible. The reduction in the growth rate of the money supply will increase interest rates, reduce aggregate demand, and reduce real GDP and employment in the short run. In terms of the short-run Phillips curve, the economy will move from a point like A (high inflation and low unemployment) to a point like B (lower inflation and higher unemployment). Once firms and workers believe the Fed will continue to follow a contractionary monetary policy, they will begin to reduce their inflation expectations, and the short-run Phillips curve will shift downward. Equilibrium in the economy will be restored at the natural rate of unemployment but at a lower rate of inflation (move from point B on the short-run Phillips curve to point C on the long-run Phillips curve).
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Refer to the scenario above. Suppose the discount weight attached to the future benefit is 1/5. People will earn a net benefit equal to:
A) -500 utils. B) -700 utils. C) 860 utils. D) 900 utils.
The efficiency
A) gain from a fixed exchange rate with the euro is smaller when trade between say, Norway and the euro zone, is extensive than when it is small. B) gain from a fixed exchange rate with euro is greater when trade between say, Norway and the euro zone, is extensive than when it is small. C) loss from a fixed exchange rate with the euro is smaller when trade between say, Norway and the euro zone, is extensive than when it is small. D) gain from a fixed exchange rate with euro is the same as when trade between say, Norway and the euro zone, is extensive than when it is small. E) gain from a fixed exchange rate with euro is the same as when trade between say, Norway and the euro zone, is small than when it is small.
With respect to an auction market,
a. labor and output are assumed to be traded in markets that are not always in equilibrium. b. all participants make decisions based on announced nominal wage rates. c. all participants make decisions based on announced product prices. d. All of the above e. None of the above
Answer the following statement(s) true (T) or false (F)
1. Ocean dumping of certain wastes is prohibited by the London Convention 1972 (LC72) and the 1996 Protocol. 2. The U.S.–Canada Air Quality Agreement represents the efforts of the two nations to combat climate change. 3. The Border 2012 Program involving the United States and Mexico has a broad agenda, including improving air and water quality, tracking hazardous waste, and promoting pollution prevention. 4. Advocates of free trade argue that increases in worldwide output and efficiency gains from specialization are among the associated gains of unencumbered international trade.