Exam 16: Inflation, Deflation and Macro Policy

How does the short-run Phillips curve differ from the long-run Phillips curve? At what level of unemployment will the two curves intersect?

What is the basic lesson/insight about the nature of inflation that is drawn from the quantity theory of money?

Consider the following Phillips curve diagram: For the case where the economy is at Point A, Point B, or Point C, explain: (a) whether actual inflation is above or below expected inflation (What is each exactly?) (b) the likely shift in the short-run Phillips curve (c) the likely change in unemployment

Demonstrate graphically, how globalization has changed the nature of the inflation/ unemployment tradeoff.

When people refer to deflation, are they generally referring to asset price deflation or goods price deflation? What is the difference between the two?

Explain how institutionally-focused economists use the price-setting process of firms to explain inflation.

Explain the difference between the distributional effects of asset inflation from the distributional effects of goods inflation.

How has globalization changed the nature of the inflation problem faced by the U.S.?

How would institutionally focused economist's explanation of the inflation process likely differ from a quantity theorist's explanation?

Assume the money supply is $1000, the velocity of money is 12, and the price level is $4.Using the quantity theory of money: (a) Determine the level of real output. (b) Determine the level of nominal output. (c) Assuming velocity remains constant, what will happen if the money supply rises by 10%?

What is the equation of exchange? State the equation and define its terms

Who wins and who loses when there is an unexpected inflation? Explain and give two examples - one dealing with wages and other dealing with interest rates.

Unexpected inflation redistributes income from lenders to borrowers.Explain using an example.

Draw a short run and long-run Phillips curve.Why is the shape of the short-run Phillips curve different from the shape of the long-run Phillips curve?

Who wins and who loses when there is unexpected inflation? Explain and offer an example.

Is zero inflation better than 2% inflation?