This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Assume expectations of prices are correct but expectations of productivity adjust slowly. Use the ... (Read 136 times)

roselinechinyere27m

  • Hero Member
  • *****
  • Posts: 557
on: Jun 30, 2018
Assume expectations of prices are correct but expectations of productivity adjust slowly. Use the PS/WS relations, graphically illustrate and explain the effects of a decrease in productivity growth on the natural rate of unemployment.
 
  What will be an ideal response?

Question 2

Use the market for central bank money to answer this question. Graphically illustrate and explain what effect a Federal Reserve purchase of bonds will have on this market and on the equilibrium interest rate.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

huda

  • Sr. Member
  • ****
  • Posts: 304
Reply #1 on: Jun 30, 2018
Answer to Question 1

The PS relation shifts up by a factor A. The WS relation shifts up by a factor Ae. If Ae>A, the PS curve shifts up by less than the WS relation shifts up, leading to an increase in the natural rate of unemployment for some time.

Answer to Question 2

A Fed purchase of bonds will cause an increase in the supply of central bank money. To restore equilibrium in this market, the interest rate will have to fall. As it does, the quantity demanded for central bank money will rise and, therefore, restore equilibrium.


roselinechinyere27m

  • Member
  • Posts: 557
Reply 2 on: Jun 30, 2018
YES! Correct, THANKS for helping me on my review

Bigfoot1984

  • Member
  • Posts: 321
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

Did you know?

Vital signs (blood pressure, temperature, pulse rate, respiration rate) should be taken before any drug administration. Patients should be informed not to use tobacco or caffeine at least 30 minutes before their appointment.

Did you know?

For about 100 years, scientists thought that peptic ulcers were caused by stress, spicy food, and alcohol. Later, researchers added stomach acid to the list of causes and began treating ulcers with antacids. Now it is known that peptic ulcers are predominantly caused by Helicobacter pylori, a spiral-shaped bacterium that normally exist in the stomach.

Did you know?

Walt Disney helped combat malaria by making an animated film in 1943 called The Winged Scourge. This short film starred the seven dwarfs and taught children that mosquitos transmit malaria, which is a very bad disease. It advocated the killing of mosquitos to stop the disease.

Did you know?

Asthma is the most common chronic childhood disease in the world. Most children who develop asthma have symptoms before they are 5 years old.

Did you know?

Bacteria have been found alive in a lake buried one half mile under ice in Antarctica.

Estimated terrestrial net primary productivity across Canada. Estimated terrestrial net primary productivity across Canada.
Headsets are ergonomically correct and allow the medical assistant or receptionist to use both hands Headsets are ergonomically correct and allow the medical assistant or receptionist to use both hands
The connector must be opened (disconnected) to check and/or adjust the ignition timing. On DIS/EDIS ... The connector must be opened (disconnected) to check and/or adjust the ignition timing. On DIS/EDIS ...
Stacking the joints. A. Correct thumb–wrist alignment for applying direct pressure. B. Incorrect ... Stacking the joints. A. Correct thumb–wrist alignment for applying direct pressure. B. Incorrect ...
British Output and Productivity Growth, 1760–1913 British Output and Productivity Growth, 1760–1913
Productivity in Temperate Oceans – Northern Hemisphere Productivity in Temperate Oceans – Northern Hemisphere
Video: ACTH/Cortisol (glycogenolysis, protein catabolism, lipolysis and gluconeogenesis)

For a complete list of videos, visit our video library