Inflation: When the price of any good increases continuously for an interval of time it is called inflation. Phillips Curve : The curve which shows how change in inflation is related to unemployment rate. According to Phillips when there is an increase in unemployment level then the inflation rate decreases. Short Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the short run. It is negatively sloped curve. Long Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the long run. It is a vertical curve. Fiscal policy: It includes government expenditure and taxes. When government expenditure is increased or taxes are decreased then aggregate demand (AD) curve shifts rightward and vice versa. Monetary policy: It includes money supply changes. When money supply increases AD curve shifts rightward and vice versa.

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Answer 1

Question

Chapter 31, Problem 12P

To determine

Concept Introduction:

Inflation: When the price of any good increases continuously for an interval of time it is called inflation.

Phillips Curve: The curve which shows how change in inflation is related to unemployment rate. According to Phillips when there is an increase in unemployment level then the inflation rate decreases.

Short Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the short run. It is negatively sloped curve.

Long Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the long run. It is a vertical curve.

Fiscal policy: It includes government expenditure and taxes. When government expenditure is increased or taxes are decreased then aggregate demand (AD) curve shifts rightward and vice versa.

Monetary policy: It includes money supply changes. When money supply increases AD curve shifts rightward and vice versa.

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Answer 2

Question

Chapter 31, Problem 12P

To determine

Concept Introduction:

Inflation: When the price of any good increases continuously for an interval of time it is called inflation.

Phillips Curve: The curve which shows how change in inflation is related to unemployment rate. According to Phillips when there is an increase in unemployment level then the inflation rate decreases.

Short Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the short run. It is negatively sloped curve.

Long Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the long run. It is a vertical curve.

Fiscal policy: It includes government expenditure and taxes. When government expenditure is increased or taxes are decreased then aggregate demand (AD) curve shifts rightward and vice versa.

Monetary policy: It includes money supply changes. When money supply increases AD curve shifts rightward and vice versa.

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Answer 3

Question

Chapter 31, Problem 12P

To determine

Concept Introduction:

Inflation: When the price of any good increases continuously for an interval of time it is called inflation.

Phillips Curve: The curve which shows how change in inflation is related to unemployment rate. According to Phillips when there is an increase in unemployment level then the inflation rate decreases.

Short Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the short run. It is negatively sloped curve.

Long Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the long run. It is a vertical curve.

Fiscal policy: It includes government expenditure and taxes. When government expenditure is increased or taxes are decreased then aggregate demand (AD) curve shifts rightward and vice versa.

Monetary policy: It includes money supply changes. When money supply increases AD curve shifts rightward and vice versa.

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Answer 4

Question

Chapter 31, Problem 12P

To determine

Concept Introduction:

Inflation: When the price of any good increases continuously for an interval of time it is called inflation.

Phillips Curve: The curve which shows how change in inflation is related to unemployment rate. According to Phillips when there is an increase in unemployment level then the inflation rate decreases.

Short Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the short run. It is negatively sloped curve.

Long Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the long run. It is a vertical curve.

Fiscal policy: It includes government expenditure and taxes. When government expenditure is increased or taxes are decreased then aggregate demand (AD) curve shifts rightward and vice versa.

Monetary policy: It includes money supply changes. When money supply increases AD curve shifts rightward and vice versa.

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Answer 5

Chapter 31, Problem 12P

To determine

Concept Introduction:

Inflation: When the price of any good increases continuously for an interval of time it is called inflation.

Phillips Curve: The curve which shows how change in inflation is related to unemployment rate. According to Phillips when there is an increase in unemployment level then the inflation rate decreases.

Short Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the short run. It is negatively sloped curve.

Long Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the long run. It is a vertical curve.

Fiscal policy: It includes government expenditure and taxes. When government expenditure is increased or taxes are decreased then aggregate demand (AD) curve shifts rightward and vice versa.

Monetary policy: It includes money supply changes. When money supply increases AD curve shifts rightward and vice versa.

Answer 6

Chapter 31, Problem 12P

To determine

Concept Introduction:

Inflation: When the price of any good increases continuously for an interval of time it is called inflation.

Phillips Curve: The curve which shows how change in inflation is related to unemployment rate. According to Phillips when there is an increase in unemployment level then the inflation rate decreases.

Short Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the short run. It is negatively sloped curve.

Long Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the long run. It is a vertical curve.

Fiscal policy: It includes government expenditure and taxes. When government expenditure is increased or taxes are decreased then aggregate demand (AD) curve shifts rightward and vice versa.

Monetary policy: It includes money supply changes. When money supply increases AD curve shifts rightward and vice versa.

Answer 7

Chapter 31, Problem 12P

To determine

Concept Introduction:

Inflation: When the price of any good increases continuously for an interval of time it is called inflation.

Phillips Curve: The curve which shows how change in inflation is related to unemployment rate. According to Phillips when there is an increase in unemployment level then the inflation rate decreases.

Short Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the short run. It is negatively sloped curve.

Long Run Phillips Curve: The curve which shows how change in inflation is related to unemployment rate in the long run. It is a vertical curve.

Fiscal policy: It includes government expenditure and taxes. When government expenditure is increased or taxes are decreased then aggregate demand (AD) curve shifts rightward and vice versa.

Monetary policy: It includes money supply changes. When money supply increases AD curve shifts rightward and vice versa.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 31 - Prob. 1BCQ Ch. 31 - Prob. 2BCQ Ch. 31 - Prob. 3BCQ Ch. 31 - Prob. 1P Ch. 31 - Prob. 2P Ch. 31 - Prob. 3P Ch. 31 - Prob. 4P Ch. 31 - Prob. 5P Ch. 31 - Prob. 6P Ch. 31 - Prob. 7P

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Chapter 31 Solutions