{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

PhillipsCurve_Practice

# PhillipsCurve_Practice - UNIVERSITY OF SOUTHERN CALIFORNIA...

This preview shows pages 1–2. Sign up to view the full content.

UNIVERSITY OF SOUTHERN CALIFORNIA Marshall School of Business BUAD 350: The Firm in the National Economy Fall 2006 Prof. Safarzadeh A practice on Chapters 8 and 9 theories Student Name: ________________ Answer the questions in the spaces provided. All the students are required to know how to solve questions 1, 3, 4 (a – d). This is a good practice for the quiz and tests. Questions 2 and 4 (e) count as extra credit questions. 1- Suppose that the Phillips curve is given as t - ∏ e t = -3(U t – U n ), where Ut = 8%, e t = t-1 , and t-1 = 3%. a. What is the natural rate of unemployment? b. Suppose the government uses fiscal policy to lower the unemployment to 6% a year and keeps it at that level. What will be the inflation rate at times t, t+1, t+2, and t+3? 2- Suppose that the Phillips curve is given as t - ∏ e t = -3(U t – U n ), where Ut = 8%, e t = Ө t-1 . Also suppose that Ө is initially equal to zero. a. What is the natural rate of unemployment?

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}