The long-run effects of monetary policy The following graphs show the state of an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second shows the long-run and short-run Phillips curves (LRPC and SRPC). 1. Suppose the central bank of the economy increases the money supply. Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves (Please use the images attached) 2. Which of the following statements are true based on these graphs? Check all that apply. a. The natural rate of unemployment is 6%. b.The natural level of output is 6%. c.It is impossible to determine the natural rate of unemployment from these graphs alone.
The long-run effects of monetary policy The following graphs show the state of an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second shows the long-run and short-run Phillips curves (LRPC and SRPC). 1. Suppose the central bank of the economy increases the money supply. Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves (Please use the images attached) 2. Which of the following statements are true based on these graphs? Check all that apply. a. The natural rate of unemployment is 6%. b.The natural level of output is 6%. c.It is impossible to determine the natural rate of unemployment from these graphs alone.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The long-run effects of
The following graphs show the state of an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and long-run
1. Suppose the central bank of the economy increases the money supply.
Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves (Please use the images attached)
2. Which of the following statements are true based on these graphs? Check all that apply.
a. The natural rate of unemployment is 6%.
b.The natural level of output is 6%.
c.It is impossible to determine the natural rate of unemployment from these graphs alone.
Transcribed Image Text:?
LRAS
AD
LRAS
AD
3
12
15
18
OUTPUT (Trillions of dollars)
PRICE LEVEL
ㅇ
Transcribed Image Text:LRPC
SRPC
LRPC
SRPC
2
6
8
10
12
UNEMPLOYMENT RATE (Percent)
INFLATION RATE
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