In the short run, an unexpected increase in the money supply results inunemployment rate.INFLATION RATE (Percent)On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the long-run effects of the increase in the moneysupply.17003912UNEMPLOYMENT RATE (Percent)15In the long run, the increase in the money supply results in.(relative to the economy's initial equilibrium),in the inflation rate and18in thein the inflation rate andin the unemployment rate 8. Monetary policy and the Phillips curveThe following graph plots the short-run Phillips curve for a hypothetical economy. The given point on the graph indicates the initial rates ofunemployment and inflation. Assume that the economy is currently in long-run equilibrium.Suppose the central bank of the hypothetical economy decides to increase the money supply,On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the short-run effects of this policy.Hint: You may assume that the central bank's move was unanticipated.INFLATION RATE (Percent)52SR Phillips Curve9612UNEMPLOYMENT RATE (Percent)1518SR Phillips Curve?

How much money in an economy is alluded to as the money supply. Truth be told, the physical money…

In the short run, an unexpected increase in the money supply results in unemployment rate. INFLATION RATE (Percent) On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the long-run effects of the increase in the money supply. 6 0 0 3 9 12 UNEMPLOYMENT RATE (Percent) 15 In the long run, the increase in the money supply results in (relative to the economy's initial equilibrium). 18 in the inflation rate and ? in the in the inflation rate and in the unemployment rate

In the short run, an unexpected increase in the money supply results in unemployment rate. INFLATION RATE (Percent) On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the long-run effects of the increase in the money supply. 6 0 0 3 9 12 UNEMPLOYMENT RATE (Percent) 15 In the long run, the increase in the money supply results in (relative to the economy's initial equilibrium). 18 in the inflation rate and ? in the in the inflation rate and in the unemployment rate

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose in 2017, the United Kingdom economy was at full employment. Nominal GDP was £2,665 billion, the real interest rate was 4 percent per year, the inflation rate was 3 percent a year, and the price level was 125. Calculate the nominal interest rate. In the long run, if the real interest rate remains the same but the inflation rate increases to 9 percent a year, how does the nominal interest rate change? The nominal interest rate is nothing percent a year. In the long run, if the real interest rate remains the same but the inflation rate increases to 9 percent a year, then the nominal interest rate ▼ decreases to remains unchanged at increases to ------ percent a year.
9) Explain why inflation may tend to accelerate.
Gg.13.
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“Members of Congress are interested in increasing the minimum wage from its current rate of $7.25 an hour to $15. What effect will this have on the unemployment rate for low-skilled workers? How is this likely to impact equilibrium output and the price level in the short run?"
5
Suppose an economy is in long-run equilibrium. The central bank reduces the money supply by 5 percent. Use your diagram to show what happens to output and the price level as the economy moves from the initial to the new short-run equilibrium. Price Level LRAS Aggregate Supply Aggregate Demand Quantity of Output Now adjust the graph to show the new long-run equilibrium. Aggregate Demand € Aggregate Supply What causes the economy to move from its short-run equilibrium to its long-run equilibrium? The government increases spending to increase aggregate demand. Nominal wages, prices, and perceptions adjust downward to this new price level. O The government increases taxes to curb aggregate demand. O Nominal wages, prices, and perceptions adjust upward to this new price level.
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