Aggregate demand, aggregate supply, and the Phillips curve in the year 2027, aggregate demand and aggregate supply in the Imaginary country of Daisen-Oki are represented by the curves AD and AS on the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand surve is given by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by The curve labeled ADB. resulting in the outcome given by point B. PRICE LEVEL 107 106 7,105 104 AD 102 101 B AD ADA 100 10 12 16 OUTPUT (Trillions of dollars) Suppose the unemployment rate is 6% under one of these two outcomes and 3% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (3%). If aggregate demand is low in 2028, and the economy is at outcome A, the inflation rate between 2027 and 2028 is Based on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to plot the unemployment rate and inflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate and inflation rate if the economy is at point B. (As you place these points, dashed drop lines will automatically extend to both axes.) Finally, use the black line (cross symbol) to draw the short-run Phillips curve for this economy in 2028. Note: For graphing pruposes, round the inflation rate under each outcome to the nearest whole percent. For example, round 1.9% to 2.0% Hint: Hover your cursor over each point after you plot it to make sure you have placed it on the exact coordinate you intended. UNEMPLOYMENT RATE (Percent) Outcome A A Outcome B Phillips Curve Suppose that the government is considering enacting an expansionary policy in 2027 that would shift aggregate demand in 2028 from ADA to AD- This would cause a the short-run Phillips curve, resulting in in the inflation rate and in the unemployment rate. Grade It Now Save & Continue without saving

Principles of Economics 2e
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Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter24: The Aggregate Demand/aggregate Supply Model
Section: Chapter Questions
Problem 60CTQ: The imaginary country of Harris Island has the aggregate supply and aggregate demand curves as Table...
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Aggregate demand, aggregate supply, and the Phillips curve
in the year 2027, aggregate demand and aggregate supply in the Imaginary country of Daisen-Oki are represented by the curves AD and AS on
the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand
surve is given by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by
The curve labeled ADB. resulting in the outcome given by point B.
PRICE LEVEL
107
106
7,105
104
AD
102
101
B
AD
ADA
100
10
12
16
OUTPUT (Trillions of dollars)
Suppose the unemployment rate is 6% under one of these two outcomes and 3% under the other. Based on the previous graph, you would expect
to be associated with the lower unemployment rate (3%).
If aggregate demand is low in 2028, and the economy is at outcome A, the inflation rate between 2027 and 2028 is
Based on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to plot the unemployment rate and
inflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate and inflation rate if the economy
is at point B. (As you place these points, dashed drop lines will automatically extend to both axes.) Finally, use the black line (cross symbol) to draw
the short-run Phillips curve for this economy in 2028.
Note: For graphing pruposes, round the inflation rate under each outcome to the nearest whole percent. For example, round 1.9% to 2.0%
Hint: Hover your cursor over each point after you plot it to make sure you have placed it on the exact coordinate you intended.
UNEMPLOYMENT RATE (Percent)
Outcome A
A
Outcome B
Phillips Curve
Suppose that the government is considering enacting an expansionary policy in 2027 that would shift aggregate demand in 2028 from ADA to AD-
This would cause a
the short-run Phillips curve, resulting in
in the inflation rate and
in the
unemployment rate.
Grade It Now
Save & Continue
without saving
Transcribed Image Text:Aggregate demand, aggregate supply, and the Phillips curve in the year 2027, aggregate demand and aggregate supply in the Imaginary country of Daisen-Oki are represented by the curves AD and AS on the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand surve is given by the curve labeled ADA curve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by The curve labeled ADB. resulting in the outcome given by point B. PRICE LEVEL 107 106 7,105 104 AD 102 101 B AD ADA 100 10 12 16 OUTPUT (Trillions of dollars) Suppose the unemployment rate is 6% under one of these two outcomes and 3% under the other. Based on the previous graph, you would expect to be associated with the lower unemployment rate (3%). If aggregate demand is low in 2028, and the economy is at outcome A, the inflation rate between 2027 and 2028 is Based on your answers to the previous questions, on the following graph use the purple point (diamond symbol) to plot the unemployment rate and inflation rate if the economy is at point A. Next, use the green point (triangle symbol) to plot the unemployment rate and inflation rate if the economy is at point B. (As you place these points, dashed drop lines will automatically extend to both axes.) Finally, use the black line (cross symbol) to draw the short-run Phillips curve for this economy in 2028. Note: For graphing pruposes, round the inflation rate under each outcome to the nearest whole percent. For example, round 1.9% to 2.0% Hint: Hover your cursor over each point after you plot it to make sure you have placed it on the exact coordinate you intended. UNEMPLOYMENT RATE (Percent) Outcome A A Outcome B Phillips Curve Suppose that the government is considering enacting an expansionary policy in 2027 that would shift aggregate demand in 2028 from ADA to AD- This would cause a the short-run Phillips curve, resulting in in the inflation rate and in the unemployment rate. Grade It Now Save & Continue without saving
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