The unemployment rate is equal to the natural rate u = un.
- Output Is Equal To Potential Output Y Yn The Unemployment Rate Is Equal To The Natural Rate U Un 1 (123.67 KiB) Viewed 18 times
Output is equal to potential output Y = Yn. The unemployment rate is equal to the natural rate u = un.
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Output is equal to potential output Y = Yn. The unemployment rate is equal to the natural rate u = un.
Output is equal to potential output Y = Yn.
The unemployment rate is equal to the natural rate u = un.
Q#5. [20 points] The medium-run equilibrium Output is equal to potential output Y = Yn. a. characterized by four conditions: C. [3 points] If the level of expected inflation is formed so pie equals à(−1), characterize the behavior of inflation in a medium-run equilibrium. b. [4 points] If the level of expected inflation is ī, what is the level of actual inflation in the medium-run equilibrium? [4 points] Write the IS relation as Y = C(Y – T) + I(Y,r + x) + G. Suppose is 2%. If x increases from 3% to 5% how must the central bank change to maintain the existing medium- run equilibrium. Explain in words. d. [3 points] Suppose G increases. How must the central bank change to maintain the existing medium-run equilibrium? Explain in words. e. [3 points] Suppose T decreases. How must the central bank change to maintain the existing medium-run equilibrium? Explain in words. f. [3 points] Discuss: In the medium run, a fiscal expansion leads to an increase in the natural rate of interest. The unemployment rate is equal to the natural rate u = Un. The real policy interest rate is equal to the natural rate of interest rn where aggregate demand equals Yn. The expected rate of inflation ² is equal to the actual rate of inflation .
The unemployment rate is equal to the natural rate u = un.
Q#5. [20 points] The medium-run equilibrium Output is equal to potential output Y = Yn. a. characterized by four conditions: C. [3 points] If the level of expected inflation is formed so pie equals à(−1), characterize the behavior of inflation in a medium-run equilibrium. b. [4 points] If the level of expected inflation is ī, what is the level of actual inflation in the medium-run equilibrium? [4 points] Write the IS relation as Y = C(Y – T) + I(Y,r + x) + G. Suppose is 2%. If x increases from 3% to 5% how must the central bank change to maintain the existing medium- run equilibrium. Explain in words. d. [3 points] Suppose G increases. How must the central bank change to maintain the existing medium-run equilibrium? Explain in words. e. [3 points] Suppose T decreases. How must the central bank change to maintain the existing medium-run equilibrium? Explain in words. f. [3 points] Discuss: In the medium run, a fiscal expansion leads to an increase in the natural rate of interest. The unemployment rate is equal to the natural rate u = Un. The real policy interest rate is equal to the natural rate of interest rn where aggregate demand equals Yn. The expected rate of inflation ² is equal to the actual rate of inflation .