4. Monetary policy and the Phillips curveThe following graph shows the current short-run Phillips curve for a hypothetical economy; the point on the graph shows the initialunemployment rate and inflation rate. Assume that the economy is currently in long-run equilibrium.Suppose the central bank of the hypothetical economy decides to increase 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 thispolicy.Hint: You may assume that the central bank's move was unanticipated.INFLATION RATE (Percent)65N100SR Phillips Curve+423UNEMPLOYMENT RATE (Percent)15SR Phillips CurveIn the short run, an unexpected increase in the money supply results inthe unemployment rate.(?)in the inflation rate andin 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 theincrease in the money supply.INFLATION RATE (Percent)653N1024UNEMPLOYMENT RATE (Percent)15In the long run, the increase in the money supply results inunemployment rate (relative to the economy's initial equilibrium).?in the inflation rate andin the

It can be defined as a form of graphical of the concept of economics which shows the rate of…

The following graph shows the current short-run Phillips curve for a hypothetical economy; the point on the graph shows the initial unemployment rate and inflation rate. Assume that the economy is currently in long-run equilibrium. Suppose the central bank of the hypothetical economy decides to increase 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.

The following graph shows the current short-run Phillips curve for a hypothetical economy; the point on the graph shows the initial unemployment rate and inflation rate. Assume that the economy is currently in long-run equilibrium. Suppose the central bank of the hypothetical economy decides to increase 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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