Assume that output began at its natural level. By drawing using AD-AS (Upward sloping) and Philips curves (graphs), analyze the short and long-run effects for these solutions.The government decreases the investment tax credit in order to discourage investment-My lecturer said it does not involve the movement of AS. so does it mean Philips curve graph along move along the curve ?

Philips curve: It refers to the curve under which the relationship between inflation and…

Answered: ssume that output began at its natural…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that output began at its natural level. By drawing using AD-AS (Upward sloping) and Philips curves (graphs), analyze the short and long-run effects for these solutions.

The government decreases the investment tax credit in order to discourage investment

-My lecturer said it does not involve the movement of AS. so does it mean Philips curve graph along move along the curve ?

Definition Definition Relationship between the rate of unemployment and the rate of inflation that shows that the lower the initial rate of unemployment, the greater the rise in wage rate corresponding to a given rise in the rate of unemployment. The Phillips curve assumes that the ratio between prices and nominal wage rates is constant in the short run. Presented graphically, the Phillips curve shows an inverse relationship between the rate of unemployment and the rate of inflation.

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