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 SRPC, is the short-run Phillips curve passing through point A.SRPC,LRPC7SRPC,11234578UNEMPLOYMENT RATE (Percent)Which of the following is true along SRPC,?The actual unemployment rate is 6%.The expected inflation rate is 5%.The actual inflation rate is 5%.The natural rate of unemployment is 3%.INFLATION RATE (Perent)

The long-run Philips curve and the short-run Philips curve are different in shape due to changes in the market condition over time.The long-run and short-run Philips curve intersect at a point which depicts the expected inflation of an economy. According to the given figure, LRPC and SRPC intersect at a point where the inflation rate is 5%, and the unemployment rate is 4%. Therefore, one can conclude that the expected inflation under this scenario would be 5%. Hence, the correct option is: The expected inflation rate is 5%.

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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 SRPC, is the short-run Phillips curve passing through point A. SRPC LRPC 7 SRPC, 1 2 3 7 UNEMPLOYMENT RATE (Percent) Which of the following is true along SRPC,? The actual unemployment rate is 6%. The expected inflation rate is 5%. O The actual inflation rate is 5%. The natural rate of unemployment is 3%. INFLATION RATE (Percent)

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 SRPC, is the short-run Phillips curve passing through point A. SRPC LRPC 7 SRPC, 1 2 3 7 UNEMPLOYMENT RATE (Percent) Which of the following is true along SRPC,? The actual unemployment rate is 6%. The expected inflation rate is 5%. O The actual inflation rate is 5%. The natural rate of unemployment is 3%. INFLATION RATE (Percent)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Aggregate demand, aggregate supply, and the Phillips curve In the year 2027, aggregate demand and aggregate supply in the imaginary country of Aso-Kuju are represented by the curves AD2027 and AS on the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand curve is given by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by the curve labeled ADB, resulting in the outcome given by point B. PRICE LEVEL 108 107 106 105 104 103 102 101 100 0 AD 2027 2 4 B AS ADB ADA 8 10 6 OUTPUT (Trillions of dollars) 12 14 16 (?) Suppose the unemployment rate is 7% under one of these two outcomes and 5% under the other. Based on the previous graph, you would expect outcome B▼ to be associated with the lower unemployment rate (5%). If aggregate demand is high in 2028, and the economy is at outcome B, the inflation rate between 2027 and 2028…
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The graph shows Iran's short-run Phillips curve and long-run Phillips curve when the natural unemployment rate is 10 percent and the expected inflation rate is 12 percent a year. Draw a point to show the current unemployment rate and inflation rate according to the news clip. Suppose Iran removes the subsidies and consumers don't know what the higher prices will be. Illustrate the most likely path of unemployment and inflation. Draw either an arrow along the SRPC showing the direction of change, or a new SRPC. Label it 1. Suppose instead that Iran removes the subsidies and announces the new prices so that consumers know what they are. Illustrate the most likely path of inflation and unemployment. Draw either an arrow along the SRPC showing the direction of change, or a new SRPC Label it 2. ILS
The following graph depicts the short-run and long-run Phillips curves (SRPC and LRPC) for a hypothetical economy in long-run macroeconomic equilibrium at point A, where the natural unemployment rate is 6% and the current inflation rate is 8% per year.
According to the St. Louis Federal Reserve the natural unemployment rate is 4.44 percent (Q2 2022 B) and the U.S. Bureau of Labor Statistics (BLS) estimates the U.S. unemployment rate (U3, March 2022 ) to be 3.6 percent. If you expect unemployment to continue to fall the short-run Phillips curve would predict: O A decrease in the inflation rate. An increase in the inflation rate. A decrease in the unemployment rate. An increase in the unemployment rate.
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I'd like help on first 3 subsections
a) Explain the concept of the natural rate of unemployment using the expectations-augmented (modified or modern) Phillips curve model. b) Why is this model useful for policy-makers?
Explain what happens to the economy if there is a temporary consumption boom that lasts for one period and the central banks keep the nominal interest rate unchanged. Include the Phillips curve and allow the economy to evolve over time.
(a) What events of the 1970s and 1980s made economists believe that the shortrun relationship between inflation and unemployment was unstable (not fixed and permanent)? (b) Explain, using a diagram(s) and the concept of stagflation, the relationship between shifts in the SRAS curve and the position of the short-run Phillips curve.