Write out the Phillips curve equation

Suppose that an economy is estimated to have a 5% unemployment rate in the long-run. Furthermore, the country observes a decrease in inflation by2percentage points for every percentage point highertheunemployment rate is relative to the natural rate of unemployment. a.(2 points)

Write out the Phillips curve equation if the population has adaptive expectations for inflation and there are no inflation shocks. b.(6 points)

Don't use plagiarized sources. Get Your Custom Essay on
Write out the Phillips curve equation
Just from $13/Page
Order Essay

Suppose that the current inflation rate is 22%. The central bank announces that it plans to lower the inflation rate by 6 percentage points per year beginning in the following year until the inflation rate hits 4%. The central bank then intends to maintain the inflation rate at 4% afterwards. Determine the unemployment rate for the next five years .

Draw the short-run Phillips Curve and the Long-run Phillips Curve on the same diagram. Demonstrate the values for inflation and unemployment you calculated from part (b).d.(4 points) Suppose that the economy instead had rational expectations and that the central bank announcement was credible. Determine the unemployment rate for the next five years.(4 points)

Draw the short-run Phillips Curve and the Long-run Phillips Curve on the same diagram. Demonstrate how the figure changes with the credible central bank announcement. Explain the reasoning behind this change. II\.(4 points)

Enumerate and explain three reasons why short-term forecasting models may be accurate for long-term forecasting. III.(6 points) What are the core principles that macroeconomists agree on according to Taylor (1997)? Explain each one in your own words.

Place Order
Grab A 14% Discount on This Paper
Pages (550 words)
Approximate price: -
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Try it now!

Grab A 14% Discount on This Paper

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

AllEscort