ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Graphically derive short run Phillips curve with the help of aggregate
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- Assume our complete 4-panel model of the economy in equilibrium at Y-full employment. If the Fed buys up government securities from the public, macroeconomists predict which one of the following? Group of answer choices a)In the long run there will be some inflation and aggregate output will eventually return to its full employment level. b)The short run aggregate demand curve shifts to the left and the short run aggregate supply curve shifts to the right. c)In the long run there will be some inflation and aggregate output will be permanently pushed above Y-full employment. d)The short run aggregate demand curve shifts to the right and the short run aggregate supply curve shifts to the right.arrow_forwardImagine there is a Eurozone recession.arrow_forwardA. What assumptions did Thomas Sargent make when he claimed that inflation is always and everywhere a fiscal phenomenon?" B. Why is it appropriate in the book's short-term model for the author to use the Phillips Curve as an Aggregate Supply curve? Does it capture the working of the labor market as well as an AS curve based, say, on sticky wages? C. Provide an example of the book's short-run model being based on "microfoundations."arrow_forward
- Suppose to get re-elected, an incumbent government wants to continuously expand the economy so that people will associate high economic growth with the current government. Explain what will happen to the economy in the long run using the AD-AS model and the Phillips curve model, with properly labelled diagrams. Thanks.arrow_forwardAnswer ONLY parts C and D.arrow_forwardExplain different approaches – Neo Keynesian, Friedman, and Lucas – of Philips curve in the short – run and Phillips curve in the long – runarrow_forward
- Consider an economy in which consumption falls. Before any policy happens in response, which will be true? the Phillips curve shifts leftward the output gap turns (more) positive we move to the left along the Phillips curve IS shifts rightwardarrow_forwardHow can you show an output gap on the vertical phillips curve model?(can use the full inflation targeting model if that helps)arrow_forwardCompared to the Adaptive Expectations Theory, the Rational Expectations Theory A) asserts the same conclusions about policy activism.B) implies that policy activism is less effectiveC) implies that policy activism is more effective.D) asserts that people cannot anticipate the effects of policies in advance.E) the inflation arising from an expansionary policy will be less.arrow_forward
- Which of the following is a component of the structure of the short-run model? MP curve IS curve Phillips curve All of the abovearrow_forwardLet's say that at some time in the past the central bank of a nation raised real interest rates to get inflation under control. Inflation has stayed low now for a couple of years. As people in the economy build this now-lower inflation into their expectations, the economy will move further away from the LR value of output we'll move to the right along the same Phillips Curve the Fed will shift the MP curve further upward the Phillips curve will shift rightwardarrow_forwardQ7 Answer part a onlyarrow_forward
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