Consider two policy alternatives for disinflation. Policy A is forecasted to last 5 years, and requires the unemployment rate to be kept above NAIRU by 3% throughout the five years. Policy B is forecasted to last 6 years, with unemployment rate above NAIRU by 4% in the first 3 years, and by 2% for the remaining 3 years. Which of the following statements is correct?Group of answer choicesIf Policy B achieves a larger reduction in inflation rate compared to Policy A, it implies Policy B has a smaller sacrifice ratio.If the sacrifice ratio of the economy is 5, Policy B should lead to a disinflation of 3%.None of the other statements is correct.Policy A has higher point-year of excess unemployment than Policy B.

If expected inflation this year is equal to last year's inflation, and the unemployment rate has been equal to the natural rate of unemployment for the past few years, we know that:Group of answer choicesInflation rate should steadily decreaseInflation rate should steadily increaseInflation rate should remain steadyInflation rate should be zero

Let us suppose the Reserve Bank of Australia implements a disinflation policy to reduce the inflation rate from 8% to a target of 3% over a period of four years. In the first year of the policy the unemployment rate reaches 9%, in the second year the unemployment rate declines to 8%, in the third year it is 7% and then, in the fourth year, when the inflation target is reached, the unemployment rate is 5%. Supposing the natural rate of unemployment is estimated to be 5.5% over this period, how would you measure the social cost of this disinflation policy?

Which of the following will reduce the inflation rate in the medium run? Group of answer choices a permanent reduction in the price of oil a large budget surplus a permanent reduction in inflation target all of the above none of the above

Expansionary fiscal policy is used in order to Blank______ the economy.Multiple choice question.increase interest rates instimulatereduce GDP inreduce inflation inincrease unemployment in

Suppose the Federal Reserve plans to conduct expansionary monetary policy during a recession. Which of the following is a policy that would promote this decision?Multiple choice question.Decrease personal income taxesIncrease personal income taxesDecrease the interest rate paid on reservesIncrease the interest rate paid on reserves