Suppose you are a staff economist with the Reserve Bank. The Governor says to you, “The rate of change in inflation is too high, and I think the Phillips curve is horizontal. What should we do to reduce these inflationary increases?” Using only the Phillips curve, how do you respond?Select one alternative:“Because the Phillips curve is flat, we need to increase interest rates a lot, as the change in inflation is not very responsive to changes in output.”“Because the Phillips curve is flat, we need to decrease interest rates a lot, as the change in inflation is not very responsive to changes in output.”“Because the Phillips curve is flat, we can do nothing to change the rate of inflation, as it does not respond to changes in output.”“Because the Phillips curve is flat, we need to increase interest rates a lot, as the change in inflation is infinitely responsive to changes in output.”“You are not giving me enough information.”

In the Phillips curve equation, which of the following will cause an increase in the current inflation rate?Select one:A.a decrease in the expected inflation rateB.an increase in the unemployment rateC.a reduction in the unemployment rateD.a decrease in the markup, m

In the Expectations-augmented Phillips curve equation, which of the following will NOT cause a rise in the current inflation rate?Group of answer choicesAll other options lead to a rise in current inflation rateAn increase in markup rate charged by the firmsA drop in unemployment rateAn increase in the NAIRU

If the unemployment rate in the economy is steady at 4 percent per year, how does the short-run Phillips curve predict that the inflation rate will be changing, if at all?    What will happen if the unemployment rate now rises to 7 percent per year? Assume there are no changes to inflation expectations. Provide an appropriate graph to support your discussion. Your discussion should be at least 500 words in length, but not more than 700 words. Use APA citations and references if you use ideas from the readings or other sources.

What is the rationale for the trade-off between inflation and unemployment in the simple Phillips Curve? Why did it come under criticism by many economists in the 1970s?

Consider a problem of time inconsistency. Suppose 0% inflation rate is desirablefor the society and the efficient level of output is larger than the flexible-pricelevel of output. There is the Phillips curve relationship between the outputand the inflation rate.(a) Why does the government have an incentive to keep loose monetary orfiscal policy if the public does not expect these policies