:. Inflation e economy begins in long-run equilibrium. Then one day, the president appoints a new chair of the Federal Reserve. This new chair is well known for r view that inflation is not a major problem for an economy. ote: You will not be graded on any changes you make to the following graph, but you may use it to help you understand the scenario described. LRAS Aggregate Supply Aggregate Demand Aggregate Supply LRAS Aggregate Demand Quantity of Output Price Level
:. Inflation e economy begins in long-run equilibrium. Then one day, the president appoints a new chair of the Federal Reserve. This new chair is well known for r view that inflation is not a major problem for an economy. ote: You will not be graded on any changes you make to the following graph, but you may use it to help you understand the scenario described. LRAS Aggregate Supply Aggregate Demand Aggregate Supply LRAS Aggregate Demand Quantity of Output Price Level
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![12. Inflation
The economy begins in long-run equilibrium. Then one day, the president appoints a new chair of the Federal Reserve. This new chair is well known for
her view that inflation is not a major problem for an economy.
Note: You will not be graded on any changes you make to the following graph, but you may use it to help you understand the scenario described.
LRAS
Aggregate Supply
Aggregate Demand
Aggregate Supply
LRAS
Aggregate Demand
Quantity of Output
Which of the following statements accurately describes what would happen as a result of this news? Check all that apply.
O People would expect the price level to rise.
O The nominal wage that workers and firms agree to in their new labor contracts would be higher than it would be otherwise.
O The profitability of producing goods and services at any given price level would increase.
O The short-run aggregate-supply curve would shift to the left.
If aggregate demand is held constant, the shift in the aggregate-supply curve will cause the price level to
and the quantity of output
produced to
Price Level](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe39a0b49-3965-4d73-8bb1-fc126632bf67%2F268cd08a-80fc-452b-badc-7e08116e78d8%2F5r0k459_processed.png&w=3840&q=75)
Transcribed Image Text:12. Inflation
The economy begins in long-run equilibrium. Then one day, the president appoints a new chair of the Federal Reserve. This new chair is well known for
her view that inflation is not a major problem for an economy.
Note: You will not be graded on any changes you make to the following graph, but you may use it to help you understand the scenario described.
LRAS
Aggregate Supply
Aggregate Demand
Aggregate Supply
LRAS
Aggregate Demand
Quantity of Output
Which of the following statements accurately describes what would happen as a result of this news? Check all that apply.
O People would expect the price level to rise.
O The nominal wage that workers and firms agree to in their new labor contracts would be higher than it would be otherwise.
O The profitability of producing goods and services at any given price level would increase.
O The short-run aggregate-supply curve would shift to the left.
If aggregate demand is held constant, the shift in the aggregate-supply curve will cause the price level to
and the quantity of output
produced to
Price Level
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