Sales contracts between developed countries are usually written (invoiced) in the national currency of the exporter

In the figure above, a factor that could cause the supply of bonds to shift to the right is

A) a decrease in government budget deficits. B) a decrease in expected inflation. C) a recession. D) a business cycle expansion.

Consider an economy in long-run equilibrium with an inflation rate (?) of 0.08 per year and a natural unemployment rate of 0.05

. Suppose Okun's law holds and a one percentage point increase in the unemployment rate reduces real output by 2% of full-employment output. The expectations-augmented Phillips curve is given by ? = ?e - 2.5 (u - 0.05). Consider a two-year disinflation. In the first year, ? = 0.06 and ?e = 0.08. In the second year, ? = 0.04 and ?e = 0.05. (a) In the first year, what is the value of the unemployment rate? (b) In the first year, by what percentage does output fall short of full-employment output? (c) In the second year, what is the value of the unemployment rate? (d) In the second year, by what percentage does output fall short of full-employment output? (e) What is the sacrifice ratio for this disinflation?