Which of the following statements best describes the relationship between inflation and unemployment in the United States during this time period? O The short-run Phillips curve shifted to the right after actual inflation was higher than expected. O The short-run Phillips curve shifted to the left after actual inflation was lower than expected. O The short-run Philip curve remained stable. The following graph shows the short-run Philips curve (SRPC) for the United States in 1964. Drag the dot along the curve, shift the curve, or both to illustrate what happened between 1964 and 1968. SRPC skPc UNEMPLOYMENT RATE The following graph shows the aggregate demand (AD) and short-run aggregate supply (AS) curves for the United States in 1954. Shift the aggregate demand curve to approximate what happened between 1964 and 1968. AD AS AS OUTPUT INFLATION RATE PRICE LEVEL

Which of the following statements best describes the relationship between inflation and unemployment in the United States during this time period? O The short-run Phillips curve shifted to the right after actual inflation was higher than expected. O The short-run Phillips curve shifted to the left after actual inflation was lower than expected. O The short-run Philip curve remained stable. The following graph shows the short-run Philips curve (SRPC) for the United States in 1964. Drag the dot along the curve, shift the curve, or both to illustrate what happened between 1964 and 1968. SRPC skPc UNEMPLOYMENT RATE The following graph shows the aggregate demand (AD) and short-run aggregate supply (AS) curves for the United States in 1954. Shift the aggregate demand curve to approximate what happened between 1964 and 1968. AD AS AS OUTPUT INFLATION RATE PRICE LEVEL

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. The Phillips curve in the short run and long run The following graph plots aggregate demand (AD) and aggregate supply (AS) for the imaginary country of Iguazu in the year 2027. Suppose the natural level of output in this economy is $7 trillion. On the following graph, use the green line (triangle symbol) to plot the long-run aggregate supply (LRAS) curve for this economy. PRICE LEVEL 108 107 LRAS AS 108 105 104 103 102 101 A AD AD 100 2 4 10 12 14 16 OUTPUT (Trillions of dollars) Outcome C Economists forecast that if the government takes no action and the economy continues to grow at the current rate, aggregate demand in 2028 will be given by the curve labeled ADA, resulting in the outcome given by point A. If, however, the government pursues an expansionary policy, aggregate demand in 2028 will be given by the curve labeled ADB, resulting in the outcome given by point B. The following table presents projections for the unemployment rates that would occur at point A and point B.…
Consider the graph below. Suppose qMC = 400, pMC = $10, and ATC = $12 at 400 units. Is the profit-maximizing firm in monopolistic competition making a profit or loss, and by how much? Price ATC MR = MC $800 profit 9мс MR Firm MC ATC Firm Demand = AR Quantity Output
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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Consider the Friedman-Phelps model of the Phillips Curve as discussed in lecture. Assume the economy is currently at Y-full employment. When the Fed sells government securities to the public, and there are no other exogenous shocks to the economy, which one of the following is predicted to happen? The actual inflation rate increases, and the unemployment rate increases permanently. O The actual inflation rate increases, and the unemployment rate increases first and then gradually goes back to the natural rate of unemployment. O The actual inflation rate decreases, and the unemployment rate increases first and then gradually goes back to the natural rate of unemployment. The actual inflation rate decreases, and the unemployment rate increases permanently. The actual inflation rate decreases, and the unemployment rate decreases first and then gradually goes back to the natural rate of unemployment.
Consider the labor market Phillips curve. A negative supply shock will cause O a movement to the left along O a movement to the right along O a left shift of O a right shift of the labor market Phillips curve.
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.
2. Analyze the effects of the following developments on both the short-run and the long-run Phillips curves. Use the graphs and explain in detail: a) a rise in the natural rate of unemployment b) a substantial increase in the price of energy
QUESTIONS Which of the following can create demand-pull inflation? O Excessive aggregate spending supply disruptions caused by global pandemics and regional wars O Sharply rising oil prices Higher labor costs Recessions and depressions
Step 1 Plot the graphs. The corresponding table includes a breakdown including Inflation Rate, Unemployment Rate, Price Level, and Real GDP. Using the data below, plot the graphs: Plot the short-run Phillips curve and the aggregate supply curve on separate graphs. Plot the long-run Phillips curve on a separate graph, when the natural unemployment rate is 6%. Inflation Rate Unemployment Rate Price Level Real GD 2% 7% 104 9.8 3% 6% 103 10.0 4% 5% 102 10.2
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