INFLATION RATE 0 2 LRPC 6 4 8 UNEMPLOYMENT RATE (Percent) 10 SRPC 12 SRPC LRPC Which of the following statements are true based on these graphs? Check all that apply. The unemployment rate is currently 6% higher than the natural rate of unemployment. The natural level of output is $3 trillion. The current quantity of output is greater than potential output. Suppose the central bank of the economy pursues a policy that decreases the money supply. Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves. The long-run effect of the central bank's policy is in real GDP. in the inflation rate, in the unemployment rate, and 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 (LRAS) curves. The second graph plots the long-run and short-run Phillips curves (LRPC and SRPC, respectively). PRICE LEVEL O LRAS 2 3 OUTPUT (Trilions of dollars) AD AD 10 LRAS

INFLATION RATE 0 2 LRPC 6 4 8 UNEMPLOYMENT RATE (Percent) 10 SRPC 12 SRPC LRPC Which of the following statements are true based on these graphs? Check all that apply. The unemployment rate is currently 6% higher than the natural rate of unemployment. The natural level of output is $3 trillion. The current quantity of output is greater than potential output. Suppose the central bank of the economy pursues a policy that decreases the money supply. Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves. The long-run effect of the central bank's policy is in real GDP. in the inflation rate, in the unemployment rate, and 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 (LRAS) curves. The second graph plots the long-run and short-run Phillips curves (LRPC and SRPC, respectively). PRICE LEVEL O LRAS 2 3 OUTPUT (Trilions of dollars) AD AD 10 LRAS

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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