Question
Please help me with these multiple choice questions 4. Consider the simple model of labor market flows with the unemployment rate following t+1 =(1) t
Please help me with these multiple choice questions
4. Consider the simple model of labor market flows with the unemployment rate following t+1=(1)t+(1t), constant job separation rate =0.03 per month and constant job finding rate =0.40 per month. Which of the following is false?
a. The half-life of a shock to unemployment is about 2 months.
b. The expected duration of an unemployment spell is about 2.5 months.
c. The steady state unemployment rate is approximately 7%.
d. The expected duration of an employment spell is about 2.77 years.
5. Consider a simple model of labor market fluctuations. A(n) ______ in the job separation rate s ______ equilibrium labor market tightness, ______ equilibrium unemployment and ______ equilibrium vacancies.
a. decrease, decreases, increases, decreases
b. increase, does not change, increases, increases
c. decrease, increases, increases, does not change
d. increase, decreases, increases, does not change
6. Which of the following is false in the dynamic AS-AD model?
a. An increase in the natural level of output has no effect on the long-run inflation rate.
b. To control inflation, the central bank should increase the nominal interest rate more than one to one in response to an increase in the inflation rate.
c. The monetary policy rule determines the slope of the dynamic AD curve.
d. The output equation relates real output negatively to nominal interest rates.
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