In the year 2027, aggregate demand and aggregate supply in the imaginary country of Patagonia are represented by the curves AD2027 and AS on thefollowing graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand curve isgiven by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by the curvelabeled ADB, resulting in the outcome given by point B.PRICE LEVEL1081071061051041031021011000AD 202724IBAS106 8OUTPUT (Trillions of dollars)AD B121416? Suppose the unemployment rate is 7% under one of these two outcomes and 5% under the other. Based on the previous graph, you wouldexpectto be associated with the lower unemployment rate (5%).If aggregate demand is low in 2028, and the economy is at outcome A, the inflation rate between 2027 and 2028 isBased on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to plot the unemployment rate andinflation 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 isat point B. (As you place these points, dashed drop lines will automatically extend to both axes.) Finally, use the black line (cross symbol) to draw theshort-run Phillips curve for this economy in 2028.Note: For graphing pruposes, round the inflation rate under each outcome to the nearest whole percent. For example, round 1.9% to 2.0%.Hint: Hover your cursor over each point after you plot it to make sure you have placed it on the exact coordinate you intended.INFLATION RATE (Percent)876100136UNEMPLOYMENT RATE (Percent)24578Outcome AOutcome BPhillips Curve(?Suppose that the government is considering enacting an expansionary policy in 2027 that would shift aggregate demand in 2028 from ADA to ADB. Thiswould cause athe short-run Phillips curve, resulting inin the inflation rate andin theunemployment rate.

Equilibrium in the goods market is achieved at the intersection of aggregate demand and aggregate…

In the year 2027, aggregate demand and aggregate supply in the imaginary country of Patagonia are represented by the curves AD2027 and AS on the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand curve is given by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by the curve labeled ADB, resulting in the outcome given by point B. PRICE LEVEL 108 107 106 105 104 103 102 101 100 0 AD 2027 2 4 B I AS ADB AD A 8 10 OUTPUT (Trillions of dollars) 12 14 16 ?

In the year 2027, aggregate demand and aggregate supply in the imaginary country of Patagonia are represented by the curves AD2027 and AS on the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand curve is given by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by the curve labeled ADB, resulting in the outcome given by point B. PRICE LEVEL 108 107 106 105 104 103 102 101 100 0 AD 2027 2 4 B I AS ADB AD A 8 10 OUTPUT (Trillions of dollars) 12 14 16 ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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