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 145 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
:D TYSM

marict

  • Member
  • Posts: 304
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

For pediatric patients, intravenous fluids are the most commonly cited products involved in medication errors that are reported to the USP.

Did you know?

Never take aspirin without food because it is likely to irritate your stomach. Never give aspirin to children under age 12. Overdoses of aspirin have the potential to cause deafness.

Did you know?

Cancer has been around as long as humankind, but only in the second half of the twentieth century did the number of cancer cases explode.

Did you know?

Prostaglandins were first isolated from human semen in Sweden in the 1930s. They were so named because the researcher thought that they came from the prostate gland. In fact, prostaglandins exist and are synthesized in almost every cell of the body.

Did you know?

Malaria was not eliminated in the United States until 1951. The term eliminated means that no new cases arise in a country for 3 years.

It can then assemble slowly into amyloid fibrils It can then assemble slowly into amyloid fibrils
Coelacanth Genes Mapped, "Living Fossil" Evolved Slowly Coelacanth Genes Mapped, "Living Fossil" Evolved Slowly
In 2008, the U.S. economy suffered a gaping wound as several trillion dollars were ripped out of it. In 2008, the U.S. economy suffered a gaping wound as several trillion dollars were ripped out of it.
Wheat and Cotton Prices and Consumer Price Indexes, 1865–1896 Wheat and Cotton Prices and Consumer Price Indexes, 1865–1896
A pharmacist can explain to a patient why medication may look different and ensure the correct ... A pharmacist can explain to a patient why medication may look different and ensure the correct ...
Adjust your focus "microscope" Adjust your focus "microscope"
Video: Fractures Animation

For a complete list of videos, visit our video library