The Phillips Curve Describing an Economy Takes the Form U

question 18

Multiple Choice

The Phillips curve describing an economy takes the form u = uⁿ - α(π - Eπ) . The central bank directly sets the inflation rate to minimize the following loss function, L (u, π) = u + γπ². The symbol u denotes the unemployment rates, uⁿ is the natural rate of unemployment, π is the inflation rate, Eπ is the expected inflation rate, and α and γ are behavioural response parameters of the economy. Private agents form their expectations rationally before the central bank sets the inflation rate. In an economy in which the central bank dislikes inflation much more than unemployment:

• A)α will be very large.
• B)a will be very small.
• C)γ will be very large.
• D)γ will be very small.

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Definitions:

Predecessor-successor Relationships

In project management, these relationships define the sequential order of tasks, where one task must be completed before the next one can start.

Forward Pass

A technique used in project management that involves calculating the earliest start and finish times for each task in a project schedule.

Crashing

An approach in project management to shorten the project schedule by adding resources to critical tasks.

Negative Float

The amount of time that must be saved in order to complete a project on schedule, indicating a project is behind its planned timeline.