international economy veon 13: What relationship between unemployment and inflat

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international economy

veon 13: What relationship between unemployment and inflation is shown by the Phillips Curve? general price level is going up rve shows a positive relationship between unemployment and inflation; a. A Ph illips curve shows a negative relationship between unemployment and inflation; when unemployment is going down, the b. A Phillip s cu s nd fall together over the course of the unemployment rates and inflation rates rise a business cycle c. A Ph illips curve sh ows the relationship between actual GDP and Potential GDP expressed as a function of unemployment Question 14: We h that economi fact, to determine when a recession has begun. When will the media (news, c think tanks such as the National Bureau of Economic Research will use after the V, etc.) report that h must drop by 10% over a twelve month period for the economy to be in a ave a "newspaper definition" of recession that is a little simpler than the c we are definitely in a recession? recession e in b. There must be two successive quarters of negative real growth for the economy to b recession Any time the real growth rate is lower in one quarter than it was during the preceding c. quarter, the economy is in a recession d. Any time the natural unemployment rate (as calculated from frictional and structural unemployment) climbs above 896, the economy is in recession Question 15: If the government is primarily concerned about unemployment becoming too high what fiscal policy can they reasonably use in order to lower the unemployment rate? To lower unemployment, the government can adopt a contractionary fiscal policy, raising a. taxes in order to reduce the public debt and make more credit available for the private investors who create jobs b. To lower unemployment, the government can reduce the trade sector by reducing both its imports and its exports, to remove currency from the international markets and make it available to the private domestic investors who create job c. To lower unemployment, the government can adopt an expansionary fiscal policy, using deficit spending to increase aggregate demand and increase GDP d. To lower unemployment, the government can reduce the interest rates which it controls so that private domestic investment will increase and create jobs Question 16: What is the best definition/explanation of Inflation? Inflation is an increase in the general price level and is measured as the annual rate of growth in a price index b. Changes in the relative prices of goods and services are considered "inflationary" if more than half of the prices of goods and services in the economy have gone up during a single year Inflation can only be measured over the whole of a business cycle, because if prices fall during a downturn and go back to their pre-peak levels, then there was no inflation during the upturn

Explanation / Answer

13. A. Phillips curve shows the trade-off between unemployment and inflation in short run. Increase in the price level leads to increase in production and supply in lure of profits and thus employment increases.

14. c. Recession means the decrease in economic parameters like income, employment, consumption, investment etc., due to negative sentiments in the economy.

15. c. Expansionary fiscal policy leads to public expenditure where money is spent on productive purpose to increase job opportunities.

16. a. Inflation is the persistent increase in price which occurs which occurs either due to increase in demand or decrease in supply.

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