In the year 2020, aggregate demand and aggregate supply in the fictional country of Gizmet are represented by the curves AD2020 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 108 107 106 105 104 103 AD2020 102 11 101 AS AD, ADB 100 00 0 2 4 10 OUTPUT (Trillions of dollars) 12 14 10 Suppose the unemployment rate is 6% under one of these two outcomes and 5% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (5%). If aggregate demand is low in 2021, and the economy is at outcome A, the inflation rate between 2020 and 2021 is
In the year 2020, aggregate demand and aggregate supply in the fictional country of Gizmet are represented by the curves AD2020 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 108 107 106 105 104 103 AD2020 102 11 101 AS AD, ADB 100 00 0 2 4 10 OUTPUT (Trillions of dollars) 12 14 10 Suppose the unemployment rate is 6% under one of these two outcomes and 5% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (5%). If aggregate demand is low in 2021, and the economy is at outcome A, the inflation rate between 2020 and 2021 is
Chapter10: Kenesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy
Section: Chapter Questions
Problem 3WNG
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