Answered: Assume that output began at its natural…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that output began at its natural level. By using AD-AS (Upward sloping) and Philips curves (graphs), analyze the short and long-run effects for each of these solutions.

a. The government decreases the investment tax credit in order to discourage investment.

b. The Malaysian Government increases assistance to b40 through various stimulus package due to the impact of the COVID-19 pandemic on this group income.

c.the evolution of technological advancement brings about a great impact on the economy.

Definition Definition Relationship between the rate of unemployment and the rate of inflation that shows that the lower the initial rate of unemployment, the greater the rise in wage rate corresponding to a given rise in the rate of unemployment. The Phillips curve assumes that the ratio between prices and nominal wage rates is constant in the short run. Presented graphically, the Phillips curve shows an inverse relationship between the rate of unemployment and the rate of inflation.

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