Bilder Flashcards
1
Q
Describe the Lake model of unemployment
A
2
Q
Describe Search Model II
A
3
Q
What does this graph show?
A
The inflation consequences of actions by a government that prefers low inflation and low employment, as it reacts to different levels of expected inflation. To maximize utility according to its preferences, the government will set the demand curve so it is exactly perpendicular to its indifference curves. With this demand curve, inflation will rise with expected inflation until U=U*. Not cool!
4
Q
Describe the formula determining which strategy to choose in the repeated Ramsey’s problem
A
5
Q
Describe the graph showing indifference curves for the government’s Nash, Ramsey and Temptation strategies
A
6
Q
State the consolidate government budget constraint in real terms
A
