SRPC LRPC SRPC 6 12 15 18 UNEMPLOYMENT RATE (Percent) Which of the following statements are true based on these graphs? Check all that apply. O The unemployment rate is currently 9% higher than the natural rate of unemployment. O The natural level of output is $6 trillion. O The current quantity of output is greater than potential output. 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. The long-run effect of the central bank's policy is in the inflation rate, in the unemployment rate, and in real GDP. INFLATION RATE
SRPC LRPC SRPC 6 12 15 18 UNEMPLOYMENT RATE (Percent) Which of the following statements are true based on these graphs? Check all that apply. O The unemployment rate is currently 9% higher than the natural rate of unemployment. O The natural level of output is $6 trillion. O The current quantity of output is greater than potential output. 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. The long-run effect of the central bank's policy is in the inflation rate, in the unemployment rate, and in real GDP. INFLATION RATE
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter14: Money And The Economy
Section14.2: Monetarism
Problem 1ST
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Transcribed Image Text:3. 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).
LRAS
AD
LRAS
AD
4
6.
8.
10
12
OUTPUT (Trillions of dollars)
PRICE LEVEL
2.
Transcribed Image Text:LIN U
SRPC
LRPC
SRPC
3
12
15
18
UNEMPLOYMENT RATE (Percent)
Which of the following statements are true based on these graphs? Check all that apply.
O The unemployment rate is currently 9% higher than the natural rate of unemployment.
O The natural level of output is $6 trillion.
The current quantity of output is greater than potential output.
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.
The long-run effect of the central bank's policy is
in the inflation rate,
in the unemployment rate, and
in real GDP.
INFLATION RATE
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