Question

In: Economics

ESSAY 1. Draw the Phillips curve. Use the model of aggregate demand and aggregate supply to...

ESSAY

1. Draw 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 inflation.

2. Does inflation and unemployment would be related in the long run? Give your explanation and draw the graph.

3. Suppose there is a tornado in western Oklahoma, causing a supply shock for wheat. What will happen in aggregate demand and aggergate supply curve for wheat? How will it affect the Phillips curve? Explain it with graph!

4. How does expected inflation shifts the short-run Phillips curve? Draw the graph to explain!

5. Show the effect of disinflationary monetary policy in the short-run and long-run Phillips curve by drawing the graph!

Solutions

Expert Solution


Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

Graphically derive short run Phillips curve with the help of aggregate demand and supply and demand.
Graphically derive short run Phillips curve with the help of aggregate demand and supply and demand.  
Draw a diagram with an aggregate demand curve, a short-run aggregate supply curve, and a long-run...
Draw a diagram with an aggregate demand curve, a short-run aggregate supply curve, and a long-run aggregate supply curve, for an economy facing a recessionary gap. a) If the government does not intervene to close this gap, describe what will happen to this economy over time. Illustrate with a diagram. b) Describe the policies that the government could use to return the economy to long-run macroeconomic equilibrium, when it is facing a recessionary gap. Illustrate with a diagram. c) What...
Draw a diagram with an aggregate demand curve, a short-run aggregate supply curve, and a long-run...
Draw a diagram with an aggregate demand curve, a short-run aggregate supply curve, and a long-run aggregate supply curve, for an economy facing a recessionary gap. a) If the government does not intervene to close this gap, describe what will happen to this economy over time. Illustrate with a diagram. b) Describe the policies that the government could use to return the economy to long-run macroeconomic equilibrium, when it is facing a recessionary gap. Illustrate with a diagram. c) What...
Draw a basic aggregate demand curve and aggregate supply graph (with LRAS constant) that shows the...
Draw a basic aggregate demand curve and aggregate supply graph (with LRAS constant) that shows the economy in the long-run equilibrium. Assume that there is a large increase in demand for Saudi exports. Show the resulting short-run equilibrium on your graph. In this short-run equilibrium, is the unemployment rate likely to be higher or lower than it was before the increase in the exports? Briefly explain. Explain how the economy adjusts back to long-run equilibrium. When the economy has adjusted...
According to the study of Aggregate Supply Curve and the Phillips Curve, a number of different...
According to the study of Aggregate Supply Curve and the Phillips Curve, a number of different models justifies the existence of sticky wages and also the ability of aggregate demand curve to affect output. (a) Explain these models. (b) What are their similarities and differences ? (c) Which of these models do you find the most plausible ? Discuss the main differences between the original expectations-augmented Phillips Curve and the curve built on Rational Expectations.
Consider the aggregate demand/aggregate supply model of Chapter 10. Assume that the long-run aggregate supply curve...
Consider the aggregate demand/aggregate supply model of Chapter 10. Assume that the long-run aggregate supply curve is vertical at Y = 3,000 while the short-run aggregate supply curve is horizontal at P = 2. The aggregate demand curve is given by Y = MV(1/P), with M = 6,000 and V=1. a) Suppose that there is an adverse supply shock that shifts the short-run supply curve upwards, to P = 3. What are the values of P and Y in the...
Consider the aggregate demand/aggregate supply model of Chapter 10. Assume that the long-run aggregate supply curve...
Consider the aggregate demand/aggregate supply model of Chapter 10. Assume that the long-run aggregate supply curve is vertical at Y = 3,000 while the short-run aggregate supply curve is horizontal at P = 2. The aggregate demand curve is given by Y = MV(1/P), with M = 6,000 and V=1. a) Suppose that there is an adverse supply shock that shifts the short-run supply curve upwards, to P = 3. What are the values of P and Y in the...
consider the macroeconomic AD-AS model depicting an aggregate demand curve and a short-run aggregate supply curve....
consider the macroeconomic AD-AS model depicting an aggregate demand curve and a short-run aggregate supply curve. assume that changes in national output also represent changes in real GDP. a. use the AD-AS model above to explain and illustrates the differences between demand-side measures and supply-side measures and give an example of each. you also need to mention which markets are embedded within each curve. b. use the AD-AS model above to analyse and illustrate the short run impact of an...
a. Derive the aggregate supply equation from the sticky price model. b. Derive the Phillips curve...
a. Derive the aggregate supply equation from the sticky price model. b. Derive the Phillips curve from the aggregate supply equation.
Use the sticky-wage theory of aggregate supply to explain the short-run Phillips Curve
Use the sticky-wage theory of aggregate supply to explain the short-run Phillips Curve
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT