Explain why the Phillips Curve is drawn to show a positive relationship between aggregate output and inflation, and why a move up the curve to an aboveequilibrium output level may be followed by an upward shift of the whole curve
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- Explain why the Phillips Curve is drawn to show a positive relationship between aggregate output and inflation, and why a move up the curve to an above equilibrium output level may be followed by an upward shift of the whole curve.Explain how the expected inflation rate affects the short-run Phillips curve. Be sure to mention the role played by the money wage rate.How does the short-run Phillips curve reflect an increase in the price of oil such as occurred in the early 1970s? as a leftward shift in the short-run Phillips curve as a rightward shift in the short-run Phillips curve as a downward movement along the short-run Phillips curve as an upward movement along the short-run Phillips curve
- How does the modern view of the Phillips curve differ from the earlier view? ___The early view of the Phillips curve suggested that the Phillips curve shifts with changes in inflation expectations. Such a view failed to recognize that the Phillips curve is a fixed inverse relationship between inflation and unemployment. ___The early view of the Phillips curve suggested that the Phillips curve is fixed, with higher rates of inflation associated with lower rates of unemployment, and vice versa. Such a view failed to recognize the importance of inflation expectations in determining the position of the short-run Phillips curve. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.In a certain economy, the expectations-augmented Phillips curve is π = T²2(u - u) and u=0.06. a. Graph the Phillips curve of this economy for an expected inflation rate of 0.10. If the central bank chooses to keep the actual inflation rate at 0.10, what will be the unemployment rate?As with demand and supply analysis, changes in the economy can cause both shifts of and movements along the short-run Phillips curve. Which of the following would cause a shift of the short-run Phillips curve? Check all that apply. An increase in government spending A decrease in short-run aggregate supply An increase in the expected inflation rate
- Does the Phillips curve have a positive or negative slope? Explain how this slope is derived. When will an increase in aggregate demand not result in lower unemployment rates in the short run?The Phillips curve represents the relationship between unemployment and inflation. You are required to think about the impact on the economy of movements along the curve. If the unemployment rate in the economy is steady at 4 percent per year, how does the short-run Phillips curve predict that the inflation rate will be changing, if at all? What will happen if the unemployment rate now rises to 7 percent per year? Assume there are no changes to inflation expectations. Provide an appropriate graph to support your discussion.Describe the concept of an accelerationist Phillips Curve and how it manifests as an empirical relationship in macroeconomic data (if you want to show data, you may choose any country). Evaluate the role and significance of inflation expectations for an accelerationist Phillips Curve.
- Which figure shows the correct effect on the Phillips curve when the domestic currency depreciates? Unexpected inflation Unexpected inflation Unexpected inflation Unexpected inflation New Old Output gap Output gap Output gap Old New Output gapAssume that inflation falls significantly below expectations. Diagram both the short-run and long-run effects on employment using a Phillips Curve diagram. What changes in this model to allow the return to longrun equilibrium?The following graph plots a short-run Phillips curve for a hypothetical economy. Show the short-run effect of a contractionary monetary policy by dragging the point along the short-run Phillips curve (SRPC) or shifting the curve to the appropriate position. INFLATION RATE (Percent) 12 INFLATION RATE (Percent) 11 10 1 0 12 1 10 2 As anticipated, inflation Now, show the long-run effect of a contractionary monetary policy by dragging either the short-run Phillips curve (SRPC), the long-run Phillips curve (LRPC), or both. SRPC UNEMPLOYMENT (Percent) 2 LRPC SRPC 5 UNEMPLOYMENT (Percent) 5 SRPC and the short-run Phillips curve shifts SRPC LRPC Which of the following examples represents a cost of inflation? Check all that apply. A general decrease in purchasing power Increased variability of relative prices A coffee shop's costs to reprint its menu to reflect fluctuating prices An unintended redistribution of wealth from borrowers to lenders , highlighting the cost of fighting inflation,…