Suppose the Natural Rate of Unemployment Is 6 Percent, the Expected

question 199

Essay

Suppose the natural rate of unemployment is 6 percent, the expected inflation is 2 percent, and the constant "a" in the short-run Phillips curve equation is 0.8. Change the expected inflation to 3 percent and draw the new Phillips curve. How did it change?

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Definitions:

Stock Split

An action by a company to divide its existing shares into multiple shares to boost the liquidity of the shares, though the overall value of the shares remains the same.

Retained Earnings

Cumulative earnings of a company that are not distributed to the owners and are reinvested in the business.

2-for-1

Describes a type of stock split where a company divides its existing stock into two shares, effectively doubling the number of shares owned by shareholders but potentially halving the price per share.

Dividend Yield Ratio

A financial ratio that indicates how much a company pays out in dividends each year relative to its share price.