# 5 suppose that the phillips curve is given by t t m z

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5.Suppose that the Phillips curve is given by,=+ (+ ) −ttmzuwhere= (1 −) +ett− 1Suppose thatm%,z%,, and= 1.= 1= 2Given this information, write out the equation for the changein the inflation rate as a function of the unemployment rate.12345678910Change in inflationt= 0.6The change in the inflation rate as a function of theunemployment rate can be written as:.(Write out the equation and substitute in the informationgiven. Do not include the percent sign in your equation.)(Properly format your expression using the tools in thepalette. Hover over tools to see keyboard shortcuts. E.g., asubscript can be created with the _ character.)On the axes provided on the right, graph the equation for thechange in the inflation rate as a function of theunemployment rate that you found above.1.)Using the line drawing tool,graph the change in theinflation rate as a function of the equation for theunemployment rate that you found above. Be sure to startyour line on they-axis.Carefully follow the instructions above and only draw therequired object.Using the graph, ifwere to, then the line would________.decreaseA.shift down but stay parallel to the originalcurve.B.keep the samey-intercept and rotatebecomingupflatterC.keep the samey-intercept and rotate, becoming.downsteeperD.shift up but stay parallel to the originalcurve.,.12345678910-10-9-8-7-6-5-4-3-2-1012345678910Change in inflationUnemployment rate
5/7/2020Ch 8-Aticha Wangbunyen6.Watch thevideo, and then answer the question below.Professor Blanchard discusses the effects of the slowdown in growth.He notes that it is "striking" that this slowdown hasnot come with a decrease in inflation - a result that should occur based on the predictions of the Phillips curve.Which of thefollowing is the explanation provided by Professor Blanchard for why inflation has not fallen as output growth has fallen?1
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7.Suppose that the Phillips curve is given by=+ 0.1 − 2ttuGiven this equation find the natural rate of unemployment.The natural rate of unemployment is%. (Enter your response as an integer.)Assume that= (1 − ) +ett− 1and suppose thatis initially equal to 0 and=and does not change. Suppose that the rate of unemployment isinitially equal to the natural rate. In yeart,the authorities decide to bring the unemployment rate down to 3% and hold itthere forever.0.02In year (t+ 1), the inflation rate will be%. (Enter your response as an integerIn year (t+ 2), the inflation rate will be%. (Enter your response as an integerIn year (t+ 5), the inflation rate will be%. (Enter your response as an integer.)This expectations structure is probably not realistic because it implies that1: http://t.).)

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Term
Fall
Professor
NAGY,KRISZTINA
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