In the year 2023, aggregate demand and aggregate supply in the fictional country of Marjan are represented by the curves AD2023 and AS on thefollowing graph.Suppose the natural level of output in this economy is $10 trillion.On the following graph, use the green line (triangle symbol) to plot the long-run aggregate supply (LRAS) curve for this economy.108AS107LRAS106АOutcome C105104AD,2023AD A103102ADB1011008101214164OUTPUT (Trillions of dollars)Economists have forecast that if the government does nothing and the economy continues to grow at the current rate, aggregate demand in 2024 willbe given by the ADA curve, resulting in the outcome illustrated by point A. If the government pursues a contractionary policy, aggregate demand inPRICE LEVEL2] be given by the ADA curve, resulting in the outcome illustrated by point A. If the government pursues a contractionary policy, aggregate demand in2024 will be given by the ADB curve, resulting in the outcome illustrated by point B.The following table gives projections for the unemployment rates that would occur at point A and point B. Consider what the rate of inflation would bebetween 2023 and 2024, depending on whether the economy moves from the initial price level of 102 to the price level at outcome B or the price levelat outcome A.Complete the table by entering the inflation rate at each potential outcome point.Note: Calculate the inflation rate to two decimal points of precision.Unemployment RateInflation RateA2%%5%

Given, Natural level of output = $10 trillion

The following table gives projections for the unemployment rates that would occur at point A and point B. Consider what the rate of inflation would be between 2023 and 2024, depending on whether the economy moves from the initial price level of 102 to the price level at outcome B or the price level at outcome A. Complete the table by entering the inflation rate at each potential outcome point. Note: Calculate the inflation rate to two decimal points of precision. Unemployment Rate Inflation Rate 2% % B 5%

The following table gives projections for the unemployment rates that would occur at point A and point B. Consider what the rate of inflation would be between 2023 and 2024, depending on whether the economy moves from the initial price level of 102 to the price level at outcome B or the price level at outcome A. Complete the table by entering the inflation rate at each potential outcome point. Note: Calculate the inflation rate to two decimal points of precision. Unemployment Rate Inflation Rate 2% % B 5%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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