Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 23: Q.13 (page 618)

If the unemployment rate is above the natural rate of unemployment, holding other factors constant, what will happen to inflation and output?

Short Answer

Expert verified

There will be a lack of labour within the business thanks to which implicit affair of the frugality will go below, If the severance rate remains above the natural severance rate. within the short run, aggregate force wind will shift to the downcast. It implies that there'll be lower affectation and better affair. this case remains till that point, until frugality reaches to long term equilibrium.

Step by step solution

01

Concept Introduction   

The aggregate claim is the global claim of the frugality for the latest goods and mercies at a given away point of your moment. The aggregate reservoir is the total quantum of most wares and graces that are outfitted into the request of frugality in veritably individual menstruation of your moment.

02

Explanation of Solution  

Affectedness is the shape of the frugality when the valuation of everything increases fast because of which nonemployment and fruit of the frugality decrease.
The rate of severance is that a part of the labour pool is unemployed. the speed of severance may be expressed within the term of chance.
Still, also there'll be a lack of labour within the business thanks to which implicit affair of the frugality will go below. If the severance rate remains above the natural severance rate. within the short run, aggregate force wind will shift to the downcast. It implies that there'll be lower affectation and better affairs. This case remains till that point until frugality reaches long term equilibrium.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

In the aftermath of the financial crisis in the United States, labor mobility has decreased significantly. How, if at all, might this affect the natural rate of unemployment?

Suppose the inflation rate remains relatively constant while output decreases and the unemployment rate increases. Using an aggregate demand and supply graph, show how this scenario is possible.

Why are central banks so concerned with inflation expectations?

Suppose the inflation rate remains relatively constant while output decreases and the unemployment rate increases. Using an aggregate demand and supply graph, show how this scenario is possible.

The Problems update with real-time data in My Lab Economics and are available for practice or instructor assignment.

1. Go to the St. Louis Federal Reserve FRED database, and find data on real government spending (GCEC1), real GDP (GDPC1), taxes (WO06RC1 Q 027 SBEA), and the personal consumption expenditure price index (PCECTPI), a measure of the price level. Download all of the data into a spreadsheet, and convert the tax data series into real taxes. To do this, for each quarter, divide taxes by the price index and then multiply by 100 .

a. Calculate the level change in real GDP over the four most recent quarters of data available and the four quarters prior to that.

b. Calculate the level change in real government spending and real taxes over the four most recent quarters of data available and the four quarters prior to that.

c. Are your results consistent with what you would expect? How do your answers to part (b) help explain, if at all, your answer to part (a)? Explain using the IS and A D curves.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free