Suppose that workers and firms perfectly forecast inflation, so that the real wage remains unchanged as the price level rises over time. Prices and wages rise at the same rate, which implies that the real wage stays constant. The following graph shows the aggregate demand curve (AD) in an economy in long-run equilibrium. Assume the natural rate of unemployment is 5%, and potential output is $40 trillion. Use the orange points (square symbols) to draw the aggregate supply curve in this case, and use the black point (X symbol) to mark the equilibrium price level and real GDP. PRICE LEVEL 180 160 140 120 100 80 0 20 40 60 REAL GDP (Trillions of Dollars) 80 AD 100 Aggregate Supply Equilibrium ? On the following graph, use the purple points (diamond symbols) to draw the short-run Phillips curve for this economy when inflation is perfectly

(23) Assume that the economy begins in long-run equilibrium and that the federal reserve decides to use open market operations to sell bonds. In the short run, what happens to the price level? Group of answer choices (A) It goes down. (B) It goes up. (C) It stays the same.

Pick one answer for each question. 1. According to a neoclassical economist, the government should respond to a decrease in aggregate demand by ______. A. raising interest rates B. doing nothing C. balancing the budget 9. From a neoclassical perspective, the Phillips curve is vertical because ______. A. long-run unemployment is fixed at the natural rate of unemployment B. long-run aggregate supply is always the same as short-run aggregate supply c. the inflation rate is fixed in the long-run

I'd like help on first 3 subsections

What does a decrease in federal government purchases do to the Neo-Keynesian model used in class? Group of answer choices It shifts long run aggregate supply left. It shifts long run aggregate supply right. It shifts short run aggregate supply left. It shifts aggregate demand left. It shifts short run aggregate supply right. It shifts aggregate demand right.

Q : Explain what it means that the phillips curve presents policy makers with a menu of choices?

According to the Rational Expectation Theory,   A) people reformulate their expectations of inflation once a change in the inflation rate has occurred. B) people never reformulate their expectations of inflation. C) expectations of inflation are based only on past values of the inflation rate. D) people reformulate their expectations of inflation once a change in policy has occurred. E) none of the above.

The Phillips curve is the relationship between (a) Change in GDP from potential and inflation. (b) GDP and unemployment. (c) The percent change in GDP and inflation. (d) The percent change in GDP and unemployment.

Inflation redistributes wealth from creditors to debtors when inflation is Question 10 options:   high, whether it is expected or not.   low, whether it is expected or not.   unexpectedly high.   unexpectedly low.

Explain different approaches – Neo Keynesian, Friedman, and Lucas – of Philips curve in the short – run and Phillips curve in the long – run