Consider a Simple Macro Model with a Constant Price Level

question 50

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 60 + 0.43Y,I = 150,G = 260,T = 0,X = 90,IM = 0.06Y.The value of the simple multiplier in this model is

• A)0.37.
• B)1.59.
• C)2.04.
• D)2.32.
• E)2.70.

Understand the significance of credibility in monetary policy.

Illustrate the relationship between the Phillips curve, inflation rate, and unemployment rate, including the concept of the natural rate of unemployment.

Elucidate the implications of the Phillips curve for fiscal and monetary policy, including the Friedman and Phelps critique.

Understand the relationship between inflation, unemployment, and the short-run Phillips curve.

---

Definitions:

White Surface

A surface that appears white because it reflects most wavelengths of light visible to the human eye.

Sensory Adaptation

The process by which sensory receptors become less sensitive to constant stimuli over time, allowing organisms to focus on changes in their environment.

Feel

To experience a sensation or emotion through touch or to perceive something emotionally or intellectually.

Cyberbullying

The use of electronic communication to bully a person, typically involving sending messages of an intimidating or threatening nature.