EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
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Chapter 31, Problem 3IAPA
To determine
To plot:
The short-run
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Students have asked these similar questions
Step 1
Plot the graphs.
The corresponding table includes a breakdown including Inflation Rate, Unemployment Rate,
Price Level, and Real GDP. Using the data below, plot the graphs:
Plot the short-run Phillips curve and the aggregate supply curve on separate graphs.
Plot the long-run Phillips curve on a separate graph, when the natural unemployment
rate is 6%.
Inflation Rate
Unemployment Rate
Price Level
Real GD
2%
7%
104
9.8
3%
6%
103
10.0
4%
5%
102
10.2
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
Aggregate demand, aggregate supply, and the Phillips curve
In the year 2027, aggregate demand and aggregate supply in the imaginary country of Daisen-Oki are represented by the curves AD 2027 and AS on the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand curve is given by the curve labeled AD(a) curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by the curve labeled AD(b), resulting in the outcome given by point B.
Suppose the unemployment rate is 7% under one of these two outcomes and 6% under the other. Based on the previous graph, you would expect (OUTCOME A or OUTCOME B) to be associated with the higher unemployment rate (7%).
If aggregate demand is high in 2028, and the economy is at outcome B, the inflation rate between 2027 and 2028 is (1.96% or 5.00% or 4.00% or 2.94%).
Based on your answers to the previous…
Chapter 31 Solutions
EBK FOUNDATIONS OF ECONOMICS
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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