Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 31, Problem 1SPPA
To determine
To plot:
The
Expert Solution & Answer
Explanation of Solution
Aggregate suppply curve;
Phillips curve;
Economics Concept Introduction
Philips curve:
The Phillips curve is an economic concept which states a significant opposite relationship between inflation and
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Students have asked these similar questions
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).
PRICE LEVEL
INFLATION RATE
0
0
3
1
LRAS
6
12
9
OUTPUT (Trillions of dollars)
LRPC
4
UNEMPLOYMENT (Percent)
2 3
15
5
AD
SRPC
18
6
AD
LRAS
SRPC
LRPC
1. Aggregate demand, aggregate supply, and the Phillips curve
In the year 2020, aggregate demand and aggregate supply in the fictional country of Bartak are represented by the curves AD2020 and AS on the
following graph. The price level is 102. The graph also shows two possible outcomes for 2021. The first potential aggregate demand curve is given by
the ADA curve, resulting in the outcome illustrated by point A. The second potential aggregate demand curve is given by the ADB curve, resulting in
the outcome illustrated by point B.
PRICE LEVEL
108
107
106
105
104
103
102 +
101-
AS
ADB
AD2020
ADA
100 +
0
2
4
6
8
10
12
14
16
OUTPUT (Trillions of dollars)
Suppose the unemployment rate is 6% under one of these two outcomes and 3% under the other. Based on the previous graph, you would expect
to be associated with the lower unemployment rate (3%).
If aggregate demand is high in 2021, and the economy is at outcome B, the inflation rate between 2020 and 2021 is
Based on your answers to the…
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).
PRICE LEVEL
INFLATION RATE
0
3
LRAS
4
5
LRPC
9
AD
O
AD
LRAS
6
12
UNEMPLOYMENT RATE (Percent)
15
SRPC
18
Ⓒ
SRPC
-
LRPC
Chapter 31 Solutions
Foundations of Economics (8th Edition)
Ch. 31 - Prob. 1SPPACh. 31 - Prob. 2SPPACh. 31 - Prob. 3SPPACh. 31 - Prob. 4SPPACh. 31 - Prob. 5SPPACh. 31 - Prob. 6SPPACh. 31 - Prob. 7SPPACh. 31 - Prob. 8SPPACh. 31 - Prob. 9SPPACh. 31 - Prob. 10SPPA
Ch. 31 - Prob. 11SPPACh. 31 - Prob. 1IAPACh. 31 - Prob. 2IAPACh. 31 - Prob. 3IAPACh. 31 - Prob. 4IAPACh. 31 - Prob. 5IAPACh. 31 - Prob. 6IAPACh. 31 - Prob. 7IAPACh. 31 - Prob. 8IAPACh. 31 - Prob. 9IAPACh. 31 - Prob. 10IAPACh. 31 - Prob. 1MCQCh. 31 - Prob. 2MCQCh. 31 - Prob. 3MCQCh. 31 - Prob. 4MCQCh. 31 - Prob. 5MCQCh. 31 - Prob. 6MCQ
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