Suppose that a fall in consumer spending causes a recession. a) Illustrate the immediate change in the economy using both an aggregate-supply/aggregate demand diagram and a Phillips-curve diagram. On both graphs, label the initial long-run equilibrium as point A and the resulting short-run equilibrium as point B. What happens to inflation and unemployment in the short run?
Suppose that a fall in consumer spending causes a recession. a) Illustrate the immediate change in the economy using both an aggregate-supply/aggregate demand diagram and a Phillips-curve diagram. On both graphs, label the initial long-run equilibrium as point A and the resulting short-run equilibrium as point B. What happens to inflation and unemployment in the short run?
Principles of Macroeconomics (MindTap Course List)
7th Edition
ISBN:9781285165912
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter22: The Short-Run Trade-off Between Inflation And Unemployment
Section: Chapter Questions
Problem 3PA
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4: Suppose that a fall in consumer spending causes a recession.
a) Illustrate the immediate change in the economy using both an aggregate-supply/aggregate demand
diagram and a
and the resulting short-run equilibrium as point B. What happens to inflation and
short run?
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