Long Run: Draw a long run aggregate supply curve. Draw an aggregate demand curve and label it ADI. Label the equilibrium price label and GDP. Show in a diagram how the effects of expansionary Fiscal Policy will affect the price level and GDP using long run AD/AS analysis. What can be said about the trade off between inflation and unemployment in this model?

Long Run: Draw a long run aggregate supply curve. Draw an aggregate demand curve and label it ADI. Label the equilibrium price label and GDP. Show in a diagram how the effects of expansionary Fiscal Policy will affect the price level and GDP using long run AD/AS analysis. What can be said about the trade off between inflation and unemployment in this model?

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter17: The Philips Curve And Expetactions Theory

Section17.6: How Different Macroeconomic Theories Attack Inflation

Problem 1YTE

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