Suppose the unemployment rate is 7% under one of these two outcomes and 5% under

Question

Suppose the unemployment rate is 7% under one of these two outcomes and 5% under the other. Based on the previous graph, you would expect _______(outcome A/outcome B)

to be associated with the lower unemployment rate (7%).

If aggregate demand is low in 2021, and the economy is at outcome A, the inflation rate between 2020 and 2021 is ________(1.96%/5.00%/2.94%/4.00%)

Based on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to plot the unemployment rate and inflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate and inflation rate if the economy is at point B. (As you place these points, dashed drop lines will automatically extend to both axes.) Finally, use the black line (cross symbol) to draw the short-run Phillips curve for this economy in 2021.

Hint: Hover your cursor over each point after you plot it to make sure you have placed it on the exact coordinate you intended.

Explanation / Answer

1) outcome A is to be associated with the lower unemployment rate 7% as the unemployment is 7% comparison to 5% it is more cells unemployment will increase your on your output will decrease that's why the outcome A is the answer.

2)the inflation rate is 2.94% as we get that by reducing the value of previous year and the current year devided by previous year multiply by 100.

3) in case of any expansionary policy by the government budget demand curve always shift towards left or right.

4) and it will result as a Phillips curve decrease in the inflation rate increase to unemployment rate .

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.