Doubling of UK Structural Unemployment (1970-1985)

Reducing Inflation After a Supply Shock via a Negative Bargaining Gap

Terms of Trade

Estimating the Real Wage Impact of a Terms-of-Trade Loss

Restoring Supply-Side Equilibrium After a Negative Supply Shock

Analyzing an External Price Shock

A small, open economy is heavily dependent on imported oil for its energy and manufacturing needs. Following a major geopolitical event, the global price of oil doubles and is expected to remain high. Arrange the following domestic economic consequences in the most likely chronological order.

A manufacturing-based economy is heavily reliant on a specific imported metal for production. If the global price of this metal permanently increases by 40%, which of the following outcomes is the most probable consequence for the domestic economy, assuming both firms and workers try to avoid a reduction in their real incomes?

Inflationary Pressures from an Import Price Shock

The Macroeconomic Ripple Effect of an Import Price Shock

A sustained increase in the price of essential imported raw materials will lead to a temporary rise in unemployment, which will return to its original level once firms and workers adjust to the new, higher price level.

An economy experiences a large and persistent increase in the cost of essential imported inputs. Match each resulting economic phenomenon with its direct consequence.

When an economy experiences a permanent increase in the cost of essential imported inputs, the resulting conflict between firms raising prices and workers demanding higher wages to protect their real incomes leads to a sustained period of inflation and an eventual increase in the long-run or ____ unemployment rate.

An economy that is a net importer of oil experiences a permanent, sharp increase in the global price of oil. This event reduces the total real income available to be distributed between domestic firms and workers. Which statement best evaluates the fundamental economic conflict this creates and its ultimate resolution?

Evaluating Policy Responses to an Import Price Shock