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.10012UNEMPLOYMENT 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 4. 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)n00>SR Philips Curve612UNEMPLOYMENT RATE (Percent)15SR Phillips Curve

Phillips curve visualizes the relationship between the unemployment rate and the inflation rate. It…

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. 12 UNEMPLOYMENT RATE (Percent) 15 In the long run, the increase in the money supply results in (relative to the economy's initial equilibrium) in the inflation rate and 18 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. 12 UNEMPLOYMENT RATE (Percent) 15 In the long run, the increase in the money supply results in (relative to the economy's initial equilibrium) in the inflation rate and 18 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 the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply. O The size of the labor force O The level of technological knowledge The price level The inflation rate Suppose the economy produces real GDP of $40 billion when unemployment is at its natural rate. Use the purple points (diamond symbol) to plot the economy's long-run aggregate supply (LRAS) curve on the graph. 132 128 LRAS 124 120 116 Q112 + PRICE LEVEL
10 Within the Keynesian system explain the following: (a) the relationship between the effectiveness of monetary policy and the interest elasticity of investment. Will monetary policy be more or less effective the higher the interest elasticity of investment demand? Now explain the relationship between the effectiveness of fiscal policy and the interest elasticity of investment demand. (b) the relationship between the effectiveness of monetary policy and the interest elasticity of money demand. Will monetary policy be more or less effective the higher the interest elasticity of money demand? Now explain the relationship between fiscal policy and the interest elasticity of money demand.
Figure: 6-1 Price Level D 0000 Refer to Figure 6-1. How would an increase in the money supply move the economy in the long run? from C to B from C to A Quantity of Output from C to A to C again from C to D
Suppose that the money supply increases by 20 percent. If there is no inflation, what does the quantity theory of money tell us must happen to real GDP? (Assume that the velocity of money is constant.) Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a It must increase by more than 20% It must increase by less than 20% C It stays the same d. It must increase by 20%
In the long run, technological progress Answer and increases in the money supply both make the price level rise. and increases in the money supply both make the price level fall. makes the price level rise, while increases in the money supply make prices fall. makes the price level fall, while increases in the money supply make prices rise. Question 23 If the price level rises above what was expected and nominal wages are fixed, then Answer production becomes less profitable so firms will hire fewer workers. production becomes less profitable so firms will hire more workers. production becomes more profitable so firms will hire fewer workers. production become more profitable so firms will hire more workers.
5. a) State whether the following are true or false and explain why. Frictional and structural unemployment are two words for the same thing. i. ii. If an economy is at full employment, the unemployment rate is zero. b) The AD (Aggregate Demand) curve shows the relationship between general price levels and real GDP. i. State and briefly explain the components of aggregate demand (AD). ii. State four factors that would cause • A fall in aggregate demand • An increase in aggregate demand c) i. What is the accelerator effect Explain the difference between the accelerator and the multiplier. Given that Country X has a nominal GDP of $100,000 and its real GDP is 11. 111.
9) Explain why inflation may tend to accelerate.
10. What does the AD curve represent economically? A. It represents the difference between actual real GDP and nominal GDP B. It describes how the Fed chooses short-run output based on inflation C. It describes how the velocity of money can fluctuate in the short run D. All of the above
Gg.13.
“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
In the graph you've just made, what is the price level on the AS curve if the unemployment rate is 5 percent? Screenshot attached thanks