Click on the graph below to make it interactive and answer the following questions.Real interest rate5%4%3%2%1%0%-10%Shift the IS curve to the left until the new output gap is -5%.-5%Unexpected inflation(Inflation - Inflation expectations)1%0%-1%MP curveIS curve5%Output gapPhillips curve-2%-10%-5%0%5% powered bydesmosOutput gapAlter the interactive graph in order to witness how a leftward shift of the IS curve affects the output gap and unexpectedinflation. Use the information to forecast economic outcomes.a. Which of the following could explain the shift witnessed in the IS-MP framework and result in lower unexpectedinflation?Recent legislation that reduced government spending on infrastructure.Recent legislation that reduced taxes.An increase in financial market risk, leading to a negative output gap.Decreased consumer wealth stemming from depressed asset prices.Decreased business confidence recently revealed in a recent business confidence index estimate.Incorrect

IS-MP curve i.e. Investment saving and monetary policy curve. This curve represents relationship…

inflation. Use the information to forecast economic outcomes. дар a. Which of the following could explain the shift witnessed in the IS-MP framework and result in lower unex inflation? Recent legislation that reduced government spending on infrastructure. Recent legislation that reduced taxes. An increase in financial market risk, leading to a negative output gap. Decreased consumer wealth stemming from depressed asset prices. Decreased business confidence recently revealed in a recent business confidence index estimate. Incorrect

inflation. Use the information to forecast economic outcomes. дар a. Which of the following could explain the shift witnessed in the IS-MP framework and result in lower unex inflation? Recent legislation that reduced government spending on infrastructure. Recent legislation that reduced taxes. An increase in financial market risk, leading to a negative output gap. Decreased consumer wealth stemming from depressed asset prices. Decreased business confidence recently revealed in a recent business confidence index estimate. Incorrect

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Step 1: Define IS-MP curve

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