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Unemployment Rate Inflation Rate 6% 3% Based on your answers to the preceding parts, use the black line (plus symbol) to draw the short-run Phillips curve (SRPC) for this economy in 2024. (Note: You will not be graded on any changes you make to this graph.) SRPC LRPC 2 UNEMPLOYMENT RATE (Percent) The short-run Phillips curve is line: Representing the tradeoff between unemployment and inflation At the natural level of output At the natural rate of unemployment INFLATION RATE (Percent) 2.

Unemployment Rate Inflation Rate 6% 3% Based on your answers to the preceding parts, use the black line (plus symbol) to draw the short-run Phillips curve (SRPC) for this economy in 2024. (Note: You will not be graded on any changes you make to this graph.) SRPC LRPC 2 UNEMPLOYMENT RATE (Percent) The short-run Phillips curve is line: Representing the tradeoff between unemployment and inflation At the natural level of output At the natural rate of unemployment INFLATION RATE (Percent) 2.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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 A 6% B 3% Based on your answers to the preceding parts, use the black line (plus symbol) to draw the short-run Phillips curve (SRPC) for this economy in 2024. (Note: You will not be graded on any changes you make to this graph.) (2 SRPC A LRPC UNEMPLOYMENT RATE (Percent) The short-run Phillips curve is v line: O Representing the tradeoff between unemployment and inflation O At the natural level of output O At the natural rate of unemployment Now consider the long-run effects of this policy. Suppose, in particular, that following implementation of the policy, the aggregate demand curve remains at ADg. Designate the long-run equilibrium that would follow such a policy as outcome C. Going back to the first graph, place the grey point (star symbol) at outcome C. Because output at point C is ▼ the natural level of output, the unemployment rate associated with outcome C is v the natural rate of unemployment. Finally, use the green line (triangle symbol) to draw the long-run Phillips curve (LRPC) on the second graph. This line is v line: O At the natural level of output O Representing the tradeoff between unemployment and inflation O At the natural rate of unemployment
Transcribed Image Text: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 A 6% B 3% Based on your answers to the preceding parts, use the black line (plus symbol) to draw the short-run Phillips curve (SRPC) for this economy in 2024. (Note: You will not be graded on any changes you make to this graph.) (2 SRPC A LRPC UNEMPLOYMENT RATE (Percent) The short-run Phillips curve is v line: O Representing the tradeoff between unemployment and inflation O At the natural level of output O At the natural rate of unemployment Now consider the long-run effects of this policy. Suppose, in particular, that following implementation of the policy, the aggregate demand curve remains at ADg. Designate the long-run equilibrium that would follow such a policy as outcome C. Going back to the first graph, place the grey point (star symbol) at outcome C. Because output at point C is ▼ the natural level of output, the unemployment rate associated with outcome C is v the natural rate of unemployment. Finally, use the green line (triangle symbol) to draw the long-run Phillips curve (LRPC) on the second graph. This line is v line: O At the natural level of output O Representing the tradeoff between unemployment and inflation O At the natural rate of unemployment
In the year 2023, aggregate demand and aggregate supply in the fictional country of Marjan are represented by the curves AD2023 and AS on the following graph. Suppose the natural level of output in this economy is $6 trillion. On the following graph, use the green line (triangle symbol) to plot the long-run aggregate supply (LRAS) curve for this economy. 108 107 LRAS AS 106 B 106 Outcome C 104 AD 2023 103 AD B ADA 102 101 100 4 6 8 OUTPUT (Trillions of dollars) 2 10 12 14 16 Economists have forecast that if the government does nothing and the economy continues to grow at the current rate, aggregate demand in 2024 will be given by the ADA curve, resulting in the outcome illustrated by point A. If the government pursues an expansionary policy, aggregate demand in 2024 will be given by the ADg 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 be between 2023 and 2024, depending on whether the economy moves from the initial price level of 102 to the price level at outcome A or the price level at outcome B. PRICE LEVEL
Transcribed Image Text:In the year 2023, aggregate demand and aggregate supply in the fictional country of Marjan are represented by the curves AD2023 and AS on the following graph. Suppose the natural level of output in this economy is $6 trillion. On the following graph, use the green line (triangle symbol) to plot the long-run aggregate supply (LRAS) curve for this economy. 108 107 LRAS AS 106 B 106 Outcome C 104 AD 2023 103 AD B ADA 102 101 100 4 6 8 OUTPUT (Trillions of dollars) 2 10 12 14 16 Economists have forecast that if the government does nothing and the economy continues to grow at the current rate, aggregate demand in 2024 will be given by the ADA curve, resulting in the outcome illustrated by point A. If the government pursues an expansionary policy, aggregate demand in 2024 will be given by the ADg 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 be between 2023 and 2024, depending on whether the economy moves from the initial price level of 102 to the price level at outcome A or the price level at outcome B. PRICE LEVEL
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