Ch 6Economics If aggregate demand is high in 2028, and the economy is at outcome B, the inflation rate between 2027 and 2028 isBased on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to plot the unemployment rate andinflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate and inflation rate if the economyis at point B. (As you place these points, dashed drop lines will automatically extend to both axes.) Finally, use the black line (cross symbol) to drawthe short-run Phillips curve for this economy in 2028.Note: For graphing pruposes, round the inflation rate under each outcome to the nearest whole percent. For example, round 1.9% to 2.0%.Hint: Hover your cursor over each point after you plot it to make sure you have placed it on the exact coordinate you intended.?INFLATION RATE (Percent)870010m20012 356UNEMPLOYMENT RATE (Percent)47800Outcome AOutcome BPhillips CurveSuppose that the government is considering enacting an expansionary policy in 2027 that would shift aggregate demand in 2028 from ADA to ADB.the short-run Phillips curve, resulting inThis would cause ain the inflation rate andin theunemployment rate. 1.Aggregate demand, aggregate supply, and the Phillips curveIn the year 2027, aggregate demand and aggregate supply in the imaginary country of Patagonia are represented by the curves AD2027 and AS onthe following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demandcurve is given by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given bythe curve labeled ADB, resulting in the outcome given by point B.PRICE LEVEL1081071061051041031021011000111AD20272400BASADADA1210OUTPUT (Trillions of dollars)B1416(?)Suppose the unemployment rate is 7% under one of these two outcomes and 5% under the other. Based on the previous graph, you would expectto be associated with the lower unemployment rate (5%).

The Phillips curve is a macroeconomic concept that explains the inverse relationship between…

1. Aggregate demand, aggregate supply, and the Phillips curve In the year 2027, aggregate demand and aggregate supply in the imaginary country of Patagonia are represented by the curves AD 2027 and AS on the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand curve is given by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by the curve labeled ADB, resulting in the outcome given by point B. 108 107 106 AS (?)

1. Aggregate demand, aggregate supply, and the Phillips curve In the year 2027, aggregate demand and aggregate supply in the imaginary country of Patagonia are represented by the curves AD 2027 and AS on the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand curve is given by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by the curve labeled ADB, resulting in the outcome given by point B. 108 107 106 AS (?)

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Ch 6

Economics

If aggregate demand is high in 2028, and the economy is at outcome B, the inflation rate between 2027 and 2028 is
Based on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to plot the unemployment rate and
inflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate and inflation rate if the economy
is at point B. (As you place these points, dashed drop lines will automatically extend to both axes.) Finally, use the black line (cross symbol) to draw
the short-run Phillips curve for this economy in 2028.
Note: For graphing pruposes, round the inflation rate under each outcome to the nearest whole percent. For example, round 1.9% to 2.0%.
Hint: Hover your cursor over each point after you plot it to make sure you have placed it on the exact coordinate you intended.
?
INFLATION RATE (Percent)
8
7
00
10
m
2
0
0
1
2 3
5
6
UNEMPLOYMENT RATE (Percent)
4
7
8
00
Outcome A
Outcome B
Phillips Curve
Suppose that the government is considering enacting an expansionary policy in 2027 that would shift aggregate demand in 2028 from ADA to ADB.
the short-run Phillips curve, resulting in
This would cause a
in the inflation rate and
in the
unemployment rate.

1.
Aggregate demand, aggregate supply, and the Phillips curve
In the year 2027, aggregate demand and aggregate supply in the imaginary country of Patagonia are represented by the curves AD2027 and AS on
the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand
curve is given by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by
the curve labeled ADB, resulting in the outcome given by point B.
PRICE LEVEL
108
107
106
105
104
103
102
101
100
0
1
1
1
AD
2027
2
4
00
B
AS
AD
AD
A
12
10
OUTPUT (Trillions of dollars)
B
14
16
(?)
Suppose the unemployment rate is 7% under one of these two outcomes and 5% under the other. Based on the previous graph, you would expect
to be associated with the lower unemployment rate (5%).

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