3. The long-run effects of monetary policyThe following graphs show the state of an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) andlong-run aggregate supply (LRAS) curves. The second shows the long-run and short-run Phillips curves (LRPC and SRPC).PRICE LEVEL02LRAS468OUTPUT (Trillions of dollars)10AD12ADLRAS LRPC+SRPC36912UNEMPLOYMENT RATE (Percent)INFLATION RATE01518The natural level of output is $6 trillion.Which of the following statements are true based on these graphs? Check all that apply.The current quantity of output is greater than potential output.The unemployment rate is currently 9% higher than the natural rate of unemployment.SRPCSuppose the central bank of the economy decreases the money supply.The long-run effect of the central bank's policy isin real GDP.LRPCShow the long-run effects of this policy on both of the graphs by shifting the appropriate curves.in the inflation rate,in the unemployment rate, and

Inflation is the rate of rise in prices over a provided period of time. Inflation is typically a…

3. The long-run effects of monetary policy The following graphs show the state of an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second shows the long-run and short-run Phillips curves (LRPC and SRPC). LEVEL LRAS 6 6 AD LRAS

3. The long-run effects of monetary policy The following graphs show the state of an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second shows the long-run and short-run Phillips curves (LRPC and SRPC). LEVEL LRAS 6 6 AD LRAS

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

3. The long-run effects of monetary policy
The following graphs show the state of an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and
long-run aggregate supply (LRAS) curves. The second shows the long-run and short-run Phillips curves (LRPC and SRPC).
PRICE LEVEL
0
2
LRAS
4
6
8
OUTPUT (Trillions of dollars)
10
AD
12
AD
LRAS

LRPC
+
SRPC
3
6
9
12
UNEMPLOYMENT RATE (Percent)
INFLATION RATE
0
15
18
The natural level of output is $6 trillion.
Which of the following statements are true based on these graphs? Check all that apply.
The current quantity of output is greater than potential output.
The unemployment rate is currently 9% higher than the natural rate of unemployment.
SRPC
Suppose the central bank of the economy decreases the money supply.
The long-run effect of the central bank's policy is
in real GDP.
LRPC
Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves.
in the inflation rate,
in the unemployment rate, and

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3. The long-run effects of monetary policy The following graphs plot the long-run equilibrium situation for an economy. The first graph plots the aggregate demand (AD) and long-run aggregate supply (URAS) curves. The second graph plots the long-run and short-run Phillips curves (LRPC and SRPC, respectively). (?) PRICE LEVEL INFLATION RATE 0 2 3 4 OUTPUT (Trofdara) 9 UNEMPLOYMENT HATE (P) AD SHPC AD - The long-run effect of the central bank's policy is in real GDP LHAS SHPC LAPC (?) Which of the following statements are true based on these graphs? Check all that apply. The natural level of output is $6 trillion. The current quantity of output is greater than potential output. The unemployment rate is currently 9% higher than the natural rate of unemployment. Suppose the central bank of the economy pursues a policy that increases the money supply. Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves. in the inflation rate, in the unemployment…
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