Need help with this. Need all answered (I gave you possible answers, choose 1 only) and show how to do the graph (I circled with red the points) Thank you ! The following graph shows an economy in long-run equilibrium at point A (grey star symbol). The vertical line is the long-run Phillips curve(LRPC). The downward-sloping curve labeled SRPC₁ is the short-run Phillips curve passing through point A.INFLATION RATE (Percent)87600SRPC,124LRPC453UNEMPLOYMENT RATE (Percent)6Which of the following is true along SRPC₁?O The actual unemployment rate is 6%.O The expected inflation rate is 5%.O The natural rate of unemployment is 3%.7BSRPC₂? Suppose that the Fed suddenly and unexpectedly decreases the money supply in an effort to reduce inflation. As a result of this unanticipatedaction, actual inflation falls to 3%.On the previous graph, use the black point (plus symbol) to illustrate the short-run effects of this policy.Now, suppose that-after a period of 3% inflation-households and firms begin to expect that the inflation rate will continue to be 3%.On the previous graph, use the purple line (diamond symbol) to draw SRPC₂, the short-run Phillips curve that is consistent with theseexpectations, assuming that it is parallel to SRPC₁. Finally, use the orange point (square symbol) to indicate the new, long-run equilibrium forthis economy.The inflation rate at the new long-run equilibrium (point C) isC isthe unemployment rate at point A.the same as/ lower than/ higher thanWas the Fed able to achieve its goal of lowering inflation?higher than/ lower than/ the same asthe inflation rate at point A, and the unemployment rate at pointO No, because the Fed cannot affect the inflation rate through monetary policy.O Yes, the Fed's policy successfully reduced inflation in both the short run and the long run.O Yes, but only in the short run; in the long run, inflation returned to its natural rate.Now, suppose that the public fully anticipates the Fed's decision to decrease the money supply. Assume the public also believes that the Fed isfirmly committed to carrying out this policy. According to rational expectations theory, when the economy is in long-run equilibrium, a fullyFrom A to B and than to C/ From A to B and then back to A/ From A to B to C and then back to B/ From A to Banticipated decrease in the money supply will cause the economy to moveon the previous Phillipspermanently / Directly from A to Ccurve graph. In this case, rational expectations theory predicts that the fully anticipated decrease in the money supply will have thepo change/ decrease/ increaseimmediate effect ofin the inflation rate andin the unemployment rate.an increase/a decrease/ no change

The Phillips curve shows that unemployment and inflation have a consistent negative relationship.…

The following graph shows an economy in long-run equilibrium at point A (grey star symbol). The vertical line is the long-run Phillips curve (LRPC). The downward-sloping curve labeled SRPC₁ is the short-run Phillips curve passing through point A. INFLATION RATE (Percent) 8 7 0 0 SRPC, 1 2 3 5 6 UNEMPLOYMENT RATE (Percent) LRPC 4 Which of the following is true along SRPC₁? O The actual unemployment rate is 6%. O The expected inflation rate is 5%. O The natural rate of unemployment is 3%. 7 8 B SRPC₂

The following graph shows an economy in long-run equilibrium at point A (grey star symbol). The vertical line is the long-run Phillips curve (LRPC). The downward-sloping curve labeled SRPC₁ is the short-run Phillips curve passing through point A. INFLATION RATE (Percent) 8 7 0 0 SRPC, 1 2 3 5 6 UNEMPLOYMENT RATE (Percent) LRPC 4 Which of the following is true along SRPC₁? O The actual unemployment rate is 6%. O The expected inflation rate is 5%. O The natural rate of unemployment is 3%. 7 8 B SRPC₂

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter27: The Philips Curve And Expetactions Theory

Section: Chapter Questions

Problem 1SQP

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The Phillips curve is given by I-T =0.1-2u The inflation is a year becomes the expected inflation in the next year. The unemployment rate is kept by the fed at 4%. If the inflation in the last year was 0, then the inflation in the next year will be: A. 1% B. 2% C. 3% D. 4% Answer 04:29 PM 19-10-2021