Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 17, Problem 5QR
To determine
The effect of reducing inflation on the short run and long run
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Students have asked these similar questions
The Fed decides to reduce inflation. Use the Phillips curve to show the short-run and long-run effects of this policy. How might the short-run costs be reduced?
When you graph the Phillips curve, what goes on the y-axis?
Change in inflation
Rate of inflation
Change in consumer price
Change in short-run output
Suppose oil prices rise what happens to the short-run Phillips curve?
Chapter 17 Solutions
Brief Principles of Macroeconomics (MindTap Course List)
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Similar questions
- Draw the short run phillips curve and long run phillips curve, explain why they are different?arrow_forwardIf a central bank had to give up its discretion and follow a rule that required it to keep inflation low, a. the short-run Phillips curve would shift up. b. the short-run Phillips curve would shift down. c. the long-run Phillips curve would shift right. d. the long-run Phillips curve would shift left.arrow_forwardwhen the economy approaches fall employment why does demand pull inflation become a problem?arrow_forward
- Draw the short-run trade-off between inflation and unemployment. How might the Fed move the economy from one point on this curve to another?arrow_forwardDraw a short run Phillips curve and show the slope of the curve and thenexplain what it implies for the policy makers?arrow_forwardThe inflation rate is 2 percent a year, and the quantity of money is growing at a pace that will maintain that inflation rate. The natural unemployment rate is 7 percent, and the current unemployment rate is 9 percent. In what direction will the unemployment rate change? How will the short-run Phillips curve and the long-run Phillips curve shift?arrow_forward
- Answer correctly and explain. I ll rate. Do it fast. The ________ suggests a negative relationship between inflation and unemployment. Responses long-run Phillips curve short-run Phillips curve aggregate demand curvearrow_forwardDraw the Phillips curve.Use the model of aggregate demand and aggregate supply to show how policy can move the economy from a point on this curve with high inflation to a point with low inflationarrow_forwardThe Phillips curve shows the relationship between inflation and what? A) Unemployment. B) The rate of price increases. C) The balance of trade. D) The rate of growth in an economy.arrow_forward
- Using the equation explain what causes shifts in the Phillips curve and what causes movement along the curve.arrow_forwardThe time inconsistency of policy implies that a. what policymakers say they will do is generally what they will do, but people don't believe them because of current policy. b. when people expect that inflation will be low, it is easier for the Fed to increase output by increasing the money supply. c. people will believe Fed policy will be less inflationary than the Fed claims. d. what policymakers say they will do is usually not what they do, but people believe them anyway.arrow_forwardWhat is core inflation and head inflation in economics?arrow_forward
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