Need help with this. Need all answered (I gave you possible answers, choose 1 only) and show how to do the graph (I circled with red the points) Thank you ! The following graph shows an economy in long-run equilibrium at point A (grey star symbol). The vertical line is the long-run Phillips curve(LRPC). The downward-sloping curve labeled SRPC₁ is the short-run Phillips curve passing through point A.INFLATION RATE (Percent)87600SRPC,124LRPC453UNEMPLOYMENT RATE (Percent)6Which of the following is true along SRPC₁?O The actual unemployment rate is 6%.O The expected inflation rate is 5%.O The natural rate of unemployment is 3%.7BSRPC₂? Suppose that the Fed suddenly and unexpectedly decreases the money supply in an effort to reduce inflation. As a result of this unanticipatedaction, actual inflation falls to 3%.On the previous graph, use the black point (plus symbol) to illustrate the short-run effects of this policy.Now, suppose that-after a period of 3% inflation-households and firms begin to expect that the inflation rate will continue to be 3%.On the previous graph, use the purple line (diamond symbol) to draw SRPC₂, the short-run Phillips curve that is consistent with theseexpectations, assuming that it is parallel to SRPC₁. Finally, use the orange point (square symbol) to indicate the new, long-run equilibrium forthis economy.The inflation rate at the new long-run equilibrium (point C) isC isthe unemployment rate at point A.the same as/ lower than/ higher thanWas the Fed able to achieve its goal of lowering inflation?higher than/ lower than/ the same asthe inflation rate at point A, and the unemployment rate at pointO No, because the Fed cannot affect the inflation rate through monetary policy.O Yes, the Fed's policy successfully reduced inflation in both the short run and the long run.O Yes, but only in the short run; in the long run, inflation returned to its natural rate.Now, suppose that the public fully anticipates the Fed's decision to decrease the money supply. Assume the public also believes that the Fed isfirmly committed to carrying out this policy. According to rational expectations theory, when the economy is in long-run equilibrium, a fullyFrom A to B and than to C/ From A to B and then back to A/ From A to B to C and then back to B/ From A to Banticipated decrease in the money supply will cause the economy to moveon the previous Phillipspermanently / Directly from A to Ccurve graph. In this case, rational expectations theory predicts that the fully anticipated decrease in the money supply will have thepo change/ decrease/ increaseimmediate effect ofin the inflation rate andin the unemployment rate.an increase/a decrease/ no change

The Phillips curve shows that unemployment and inflation have a consistent negative relationship. The Phillips curve visually depicts the economic link between the rate of unemployment (or the rate of change in unemployment) and the rate of change in money wages. The Phillips Curve depicts the many inflation-unemployment rate pairings that are accessible to the economy. The Phillips Curve could be useful to policymakers.In the short run Phillip curve 1 meets the long term Phillip curve at point A, equating to a 5% inflation rate.The correct statement is, "The true inflation rate is 5%." As a result, "b" is the correct answer. At point B, the 3% inflation rate intersects SRPC1, corresponding to a 6% unemployment rate.SRPC will eventually shift to the left and intersect The inflation rate at point C is less than that of point A, while the unemployment rate at point C is the same as that of point A Yes, the Fed's strategy succeeded in lowering inflation both in the short and long run.When the economy is in long term equilibrium, a fully predicted fall in the money supply will cause the economy to return to the prior Philips curve graph, according to rational expectations theory. In this situation, rational expectations theory predicts that a fully anticipated fall in the money supply will result in an immediate decrease in inflation and no change in the unemployment rate.

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The following graph shows an economy in long-run equilibrium at point A (grey star symbol). The vertical line is the long-run Phillips curve (LRPC). The downward-sloping curve labeled SRPC₁ is the short-run Phillips curve passing through point A. INFLATION RATE (Percent) 8 7 0 0 SRPC, 1 2 3 5 6 UNEMPLOYMENT RATE (Percent) LRPC 4 Which of the following is true along SRPC₁? O The actual unemployment rate is 6%. O The expected inflation rate is 5%. O The natural rate of unemployment is 3%. 7 8 B SRPC₂

The following graph shows an economy in long-run equilibrium at point A (grey star symbol). The vertical line is the long-run Phillips curve (LRPC). The downward-sloping curve labeled SRPC₁ is the short-run Phillips curve passing through point A. INFLATION RATE (Percent) 8 7 0 0 SRPC, 1 2 3 5 6 UNEMPLOYMENT RATE (Percent) LRPC 4 Which of the following is true along SRPC₁? O The actual unemployment rate is 6%. O The expected inflation rate is 5%. O The natural rate of unemployment is 3%. 7 8 B SRPC₂

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Need help with this. Need all answered (I gave you possible answers, choose 1 only) and show how to do the graph (I circled with red the points) Thank you !

The following graph shows an economy in long-run equilibrium at point A (grey star symbol). The vertical line is the long-run Phillips curve
(LRPC). The downward-sloping curve labeled SRPC₁ is the short-run Phillips curve passing through point A.
INFLATION RATE (Percent)
8
7
6
0
0
SRPC,
1
2
4
LRPC
4
5
3
UNEMPLOYMENT RATE (Percent)
6
Which of the following is true along SRPC₁?
O The actual unemployment rate is 6%.
O The expected inflation rate is 5%.
O The natural rate of unemployment is 3%.
7
B
SRPC₂
?

Suppose that the Fed suddenly and unexpectedly decreases the money supply in an effort to reduce inflation. As a result of this unanticipated
action, actual inflation falls to 3%.
On the previous graph, use the black point (plus symbol) to illustrate the short-run effects of this policy.
Now, suppose that-after a period of 3% inflation-households and firms begin to expect that the inflation rate will continue to be 3%.
On the previous graph, use the purple line (diamond symbol) to draw SRPC₂, the short-run Phillips curve that is consistent with these
expectations, assuming that it is parallel to SRPC₁. Finally, use the orange point (square symbol) to indicate the new, long-run equilibrium for
this economy.
The inflation rate at the new long-run equilibrium (point C) is
C is
the unemployment rate at point A.
the same as/ lower than/ higher than
Was the Fed able to achieve its goal of lowering inflation?
higher than/ lower than/ the same as
the inflation rate at point A, and the unemployment rate at point
O No, because the Fed cannot affect the inflation rate through monetary policy.
O Yes, the Fed's policy successfully reduced inflation in both the short run and the long run.
O Yes, but only in the short run; in the long run, inflation returned to its natural rate.
Now, suppose that the public fully anticipates the Fed's decision to decrease the money supply. Assume the public also believes that the Fed is
firmly committed to carrying out this policy. According to rational expectations theory, when the economy is in long-run equilibrium, a fully
From A to B and than to C/ From A to B and then back to A/ From A to B to C and then back to B/ From A to B
anticipated decrease in the money supply will cause the economy to move
on the previous Phillips
permanently / Directly from A to C
curve graph. In this case, rational expectations theory predicts that the fully anticipated decrease in the money supply will have the
po change/ decrease/ increase
immediate effect of
in the inflation rate and
in the unemployment rate.
an increase/a decrease/ no change

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