The following graph plots the short-run Phillips curve for a hypothetical economy. The given point on the graph indicates the initial rates ofunemployment and inflation. Assume that the economy is currently in long-run equilibrium.Suppose the central bank of the hypothetical economy decides to decrease the money supply.On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the short-run effects of this policy.Hint: You may assume that the central bank's move was unanticipated.INFLATION RATE (Percent)LEJ3CA3M032MI INOTSR Phillips CurveUNEMPLOYMENT RATE (Percent)NIn the short run, an unexpected decrease in the money supply results inunemployment rate.SR Phillips Curvein the inflation rate and4in the IsIn the short run, an unexpected decrease in the money supply results inunemployment rate.INFLATION RATE (Percent)On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the long-run effects of the decrease in the moneysupply.532002818UNEMPLOYMENT RATE (Percent)10In the long run, the decrease in the money supply results in(relative to the economy's initial equilibrium).1210in the inflation rate and?in the inflation rate andin the27in the unemployment rate

The Phillips curve visually depicts the economic link between the rate of unemployment (or the rate…

The following graph plots the short-run Phillips curve for a hypothetical economy. The given point on the gall unemployment and inflation. Assume that the economy is currently in long-run equilibrium. Suppose the central bank of the hypothetical economy decides to decrease the money supply. On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the short-run effects of this policy. Hint: You may assume that the central bank's move was unanticipated. INFLATION RATE (Percent) 0 0 2 6 SR Phillips Curve 4 UNEMPLOYMENT RATE (Percent) 10 12 In the short run, an unexpected decrease in the money supply results in unemployment rate. SR Phillips Curve O in the inflation rate and W in the

The following graph plots the short-run Phillips curve for a hypothetical economy. The given point on the gall unemployment and inflation. Assume that the economy is currently in long-run equilibrium. Suppose the central bank of the hypothetical economy decides to decrease the money supply. On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the short-run effects of this policy. Hint: You may assume that the central bank's move was unanticipated. INFLATION RATE (Percent) 0 0 2 6 SR Phillips Curve 4 UNEMPLOYMENT RATE (Percent) 10 12 In the short run, an unexpected decrease in the money supply results in unemployment rate. SR Phillips Curve O in the inflation rate and W in the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The following graph plots the short-run Phillips curve for a hypothetical economy. The given point on the graph indicates the initial rates of
unemployment and inflation. Assume that the economy is currently in long-run equilibrium.
Suppose the central bank of the hypothetical economy decides to decrease the money supply.
On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the short-run effects of this policy.
Hint: You may assume that the central bank's move was unanticipated.
INFLATION RATE (Percent)
LEJ
3
CA3
M
0
3
2
MI INOT
SR Phillips Curve
UNEMPLOYMENT RATE (Percent)
N
In the short run, an unexpected decrease in the money supply results in
unemployment rate.
SR Phillips Curve
in the inflation rate and
4
in the

Is
In the short run, an unexpected decrease in the money supply results in
unemployment rate.
INFLATION RATE (Percent)
On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the long-run effects of the decrease in the money
supply.
5
3
2
0
0
2
8
18
UNEMPLOYMENT RATE (Percent)
10
In the long run, the decrease in the money supply results in
(relative to the economy's initial equilibrium).
12
10
in the inflation rate and
?
in the inflation rate and
in the
27
in the unemployment rate

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