The following graph shows a short-run Phillips curve for a hypothetical economy.Show the short-run effect of a contractionary monetary policy by dragging the point along the short-run Phillips curve (SRPC) or shifting the curve tothe appropriate position.(?121110SRPC9873SRPC2112346.UNEMPLΟΥΜΕNT (Percent)INFLATION RATE (Percent)LO Now, show the long-run effect of a contractionary monetary policy by dragging either the short-run Phillips curve (SRPC), the long-run Phillips curve(LRPC), or both.(?12LRPC1110SRPCLRPC743SRPC21124UNEMPLOYMENT (Percent)INFLATION RATE (Percent)

The Phillips curve was given by A.W Phillips. It depicts the trade-off between the Unemployment and…

Answered: The following graph shows a short-run…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. The stock market crash has caused a great number of asset prices to drop sharply.If people’s expectation on current inflation level remain unchanged, what wouldbe the effects of this crisis to inflation and unemployment? Explain and useappropriate diagrams to support your answer.
D Question 1 The short-run Phillips curve is a curve that shows the relationship, other things being constant, between and O the inflation rate; the unemployment rate O the inflation rate; the nominal interest rate O the unemployment rate; real GDP 0.1 pts O potential GDP; the natural unemployment rate O the inflation rate; the expected inflation rate .
The following graph depicts the short-run and long-run Phillips curves (SRPC and LRPC) for a hypothetical economy in long-run macroeconomic equilibrium at point A, where the natural unemployment rate is 6% and the current inflation rate is 8% per year. LRPC 18 16 12 10 A 8 4 SRPC + 0 1 4 8 9. UNEMPLOYMENT RATE (Percent) 10 20 14 INFLATION RATE (Percent)
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5. Consider the standard Phillips curve. Select all the correct statements: (a) A positive aggregate demand shock will lead to an upward shift in the Phillips curve. (b) Changes in short-run output will lead to movements along the Phillips curve. (c) A negative inflation shock will lead to movements along the Phillips curve. (d) A shock to the price of oil will lead to a shift in the Phillips curve. (e) The inflation rate will always be equal to zero when short-run output is equal to zero.
13
For this question, assume that the expected rate of inflation is a function of past year's inflation. Also assume that the unemployment rate has been greater than the natural rate of unemployment for a number of years. Given this information, we know that the inflation rate will be approximately equal to the natural rate of unemployment. А. the rate of inflation will approximately be equal to zero. В. C. the rate of inflation should steadily decrease. Op the rate of inflation should steadily increase over time. the rate of inflation should neither increase nor decrease. Е.
Inflation Rate (%) 4 PCLR с 45 7 Unemployment Multiple Choice -PC₂ PC₁ Rate (%) Refer to the diagram. Assume that the natural rate of unemployment is 5 percent and that the economy is initially operating at point a where the expected and actual rates of inflation are each 6 percent. If the actual rate of inflation unexpectedly falls from 6 percent to 4 percent, then the unemployment rate will Opermanently fall from 5 percent to 4 percent. Help permanently rise from 5 percent to 7 percent.

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