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In the year 2020, aggregate demand and aggregate supply in the fictional country of Bartak are represented by the curves AD020 and AS on the following graph. The price level is 102. The graph also shows two possible outcomes for 2021. The first potential aggregate demand curve is given by the ADA curve, resulting in the outcome illustrated by point A. The second potential aggregate demand curve is given by the ADB curve, resulting in the outcome illustrated by point B. PRICE LEVEL 106 107 106 B 105 104 AD 2020 103 102 101 AS ADA ADB 100 4 10 12 14 OUTPUT (Trillions of dollars) ? Suppose the unemployment rate is 6% under one of these two outcomes and 3% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (3%). outcome B emand is high in 2021, and the economy is at outcome B, the inflation rate between 2020 and 2021 is outcome A Based on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to plot the unemployment rate and inflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate and inflation rate if the economy is at point B. (As you place these points, dashed drop lines will automatically extend to both axes.) Finally, use the black line (plus symbol) to draw the short-run Phillips curve for this economy in 2021.

In the year 2020, aggregate demand and aggregate supply in the fictional country of Bartak are represented by the curves AD020 and AS on the following graph. The price level is 102. The graph also shows two possible outcomes for 2021. The first potential aggregate demand curve is given by the ADA curve, resulting in the outcome illustrated by point A. The second potential aggregate demand curve is given by the ADB curve, resulting in the outcome illustrated by point B. PRICE LEVEL 106 107 106 B 105 104 AD 2020 103 102 101 AS ADA ADB 100 4 10 12 14 OUTPUT (Trillions of dollars) ? Suppose the unemployment rate is 6% under one of these two outcomes and 3% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (3%). outcome B emand is high in 2021, and the economy is at outcome B, the inflation rate between 2020 and 2021 is outcome A Based on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to plot the unemployment rate and inflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate and inflation rate if the economy is at point B. (As you place these points, dashed drop lines will automatically extend to both axes.) Finally, use the black line (plus symbol) to draw the short-run Phillips curve for this economy in 2021.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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INFLATION RATE (Percent) Suppose the unemployment rate is 6% under one of these two outcomes and 3% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (3%). If aggregate demand is high in 2021, and the economy is at outcome B, the inflation rate between 2020 and 2021 is Based on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to p inflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate is at point B. (As you place these points, dashed drop lines will automatically extend to both axes.) Finally, use the b the short-run Phillips curve for this economy in 2021. 0.98% 2.94% 3.00% 5.00% 0 0 1 2 3 unemployment rate. 5 UNEMPLOYMENT RATE (Percent) Outcome A Outcome B Phillips Curve employment rate and ion rate if the economy plus symbol) to draw Suppose that the government is considering enacting an expansionary policy in 2020 that would shift aggregate demand in 2021 from ADA to ADB. This would cause a the short-run Phillips curve, resulting in in the inflation rate and in the
Transcribed Image Text:INFLATION RATE (Percent) Suppose the unemployment rate is 6% under one of these two outcomes and 3% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (3%). If aggregate demand is high in 2021, and the economy is at outcome B, the inflation rate between 2020 and 2021 is Based on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to p inflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate is at point B. (As you place these points, dashed drop lines will automatically extend to both axes.) Finally, use the b the short-run Phillips curve for this economy in 2021. 0.98% 2.94% 3.00% 5.00% 0 0 1 2 3 unemployment rate. 5 UNEMPLOYMENT RATE (Percent) Outcome A Outcome B Phillips Curve employment rate and ion rate if the economy plus symbol) to draw Suppose that the government is considering enacting an expansionary policy in 2020 that would shift aggregate demand in 2021 from ADA to ADB. This would cause a the short-run Phillips curve, resulting in in the inflation rate and in the
Homework: Chapter 27 1. Aggregate demand, aggregate supply, and the Phillips curve In the year 2020, aggregate demand and aggregate supply in the fictional country of Bartak are represented by the curves AD20 and AS on the following graph. The price level is 102. The graph also shows two possible outcomes for 2021. The first potential aggregate demand curve is given by the ADA curve, resulting in the outcome illustrated by point A. The second potential aggregate demand curve is given by the ADB curve, resulting in the outcome illustrated by point B. PRICE LEVEL 106 AS 107 106 B 105 104 AD 2020 103 102 101 19V 100 D 10 AD OUTPUT (Trillions of dollars) ADB 12 14 (?) Suppose the unemployment rate is 6% under one of these two outcomes and 3% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (3%). outcome B outcome A emand is high in 2021, and the economy is at outcome B, the inflation rate between 2020 and 2021 is Based on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to plot the unemployment rate and inflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate and inflation rate if the economy is at point B. (As you place these points, dashed drop lines will automatically extend to both axes) Finally, use the black line (plus symbol) to draw the short-run Phillips curve for this economy in 2021.
Transcribed Image Text:Homework: Chapter 27 1. Aggregate demand, aggregate supply, and the Phillips curve In the year 2020, aggregate demand and aggregate supply in the fictional country of Bartak are represented by the curves AD20 and AS on the following graph. The price level is 102. The graph also shows two possible outcomes for 2021. The first potential aggregate demand curve is given by the ADA curve, resulting in the outcome illustrated by point A. The second potential aggregate demand curve is given by the ADB curve, resulting in the outcome illustrated by point B. PRICE LEVEL 106 AS 107 106 B 105 104 AD 2020 103 102 101 19V 100 D 10 AD OUTPUT (Trillions of dollars) ADB 12 14 (?) Suppose the unemployment rate is 6% under one of these two outcomes and 3% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (3%). outcome B outcome A emand is high in 2021, and the economy is at outcome B, the inflation rate between 2020 and 2021 is Based on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to plot the unemployment rate and inflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate and inflation rate if the economy is at point B. (As you place these points, dashed drop lines will automatically extend to both axes) Finally, use the black line (plus symbol) to draw the short-run Phillips curve for this economy in 2021.
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