The following graph plots a short-run Phillips curve for a hypothetical economy. Show the short-run effect of a contractionary monetary policy by dragging the point along the short-run Phillips curve (SRPC) or shifting the curve to the appropriate position. Now, show the long-run effect of a contractionary monetary policy by dragging either the short-run Phillips curve (SRPC), the long-run Phillips curve (LRPC), or both. As anticipated, inflation (rises/falls)  and the short-run Phillips curve shifts  (downward/upward)  , highlighting the cost of fighting inflation, which is (higher unemployment in the long run/temporary unemployment/lower unemployment)   . Which of the following examples

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The following graph plots a short-run Phillips curve for a hypothetical economy.

Show the short-run effect of a contractionary monetary policy by dragging the point along the short-run Phillips curve (SRPC) or shifting the curve to the appropriate position.

Now, show the long-run effect of a contractionary monetary policy by dragging either the short-run Phillips curve (SRPC), the long-run Phillips curve (LRPC), or both.

As anticipated, inflation (rises/falls)  and the short-run Phillips curve shifts  (downward/upward)  , highlighting the cost of fighting inflation, which is (higher unemployment in the long run/temporary unemployment/lower unemployment)   .

Which of the following examples represents a cost of inflation? Check all that apply.

-An unintended redistribution of wealth from borrowers to lenders
 
-A general decrease in purchasing power
 
-Increased variability of relative prices
 
-A coffee shop’s costs to reprint its menu to reflect fluctuating prices
Show the short-run effect of a contractionary monetary policy by dragging the point along the short-run Phillips curve (SRPC) or shifting the curve to
the appropriate position.
INFLATION RATE (Percent)
12
11
10
9
8
5
4
3
2
1
0
0
1
2
4
UNEMPLOYMENT (Percent)
SRPC
3
5
6
SRPC
?
Transcribed Image Text:Show the short-run effect of a contractionary monetary policy by dragging the point along the short-run Phillips curve (SRPC) or shifting the curve to the appropriate position. INFLATION RATE (Percent) 12 11 10 9 8 5 4 3 2 1 0 0 1 2 4 UNEMPLOYMENT (Percent) SRPC 3 5 6 SRPC ?
Now, show the long-run effect of a contractionary monetary policy by dragging either the short-run Phillips curve (SRPC), the long-run Phillips curve
(LRPC), or both.
INFLATION RATE (Percent)
12
11
10
9
∞
4
3
2
1
0
0
1
LRPC
2
4
UNEMPLOYMENT (Percent)
SRPC
3
5
6
SRPC
LRPC
?
Transcribed Image Text:Now, show the long-run effect of a contractionary monetary policy by dragging either the short-run Phillips curve (SRPC), the long-run Phillips curve (LRPC), or both. INFLATION RATE (Percent) 12 11 10 9 ∞ 4 3 2 1 0 0 1 LRPC 2 4 UNEMPLOYMENT (Percent) SRPC 3 5 6 SRPC LRPC ?
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