Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Chapter 14, Problem 2QR
To determine
The relation between the
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What is The Short-Run and Long-Run Phillips Curves?
What is stagflation? How may it affect the Phillips Curve? What policy measures may be taken to reduce stagflation?
Changes in which factors could cause aggregate demand to shift from AD to AD1?
What could happen to the unemployment rate?
What could happen to the inflation rate?
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- I can't find anything to back up that a decrease in aggregate demand causes cost push inflation. My textbook does mention the increase in aggregate supply. I thought that a decrease in price generally meant deflation? And doesn't the decrease (left shift) in aggregate demand result in lower prices?arrow_forwardWhat is the "Phillips Curve"? Why do inflation and unemployment tend to be inversely related?arrow_forwardWhat is the short-run relationship between the unemployment rate and inflation rate as explained by the economist Phillips?arrow_forward
- How do changes in aggregate demand and aggregate supply might cause inflation in the economy?arrow_forwardDoes the Phillips curve have a positive or negative slope? Explain how this slope is derived. When will an increase in aggregate demand not result in lower unemployment rates in the short run?arrow_forwardUse the New-Keynesian model with partial sticky price to briefly discuss the reasons of the current high inflation in Australia. Use the Aggregate supply-Aggregate Demand diagram to support your answer.arrow_forward
- Why does the aggregate demand curve slope downward?arrow_forwardUse aggregate demand and aggregate supply to explain the inverse relationship between inflation and unemplymentarrow_forward"As the economy moves upward along its aggregate supply curve, the economy also moves upward along its short-run Phillips curve." Is the previous statement correct or incorrect?arrow_forward
- When aggregate output is below the natural rate of output, what happens to the inflation rate over time if theaggregate demand curve remains unchanged? Why?arrow_forwardWhat happens in the Phillips Curve diagram when the AS curve shifts?arrow_forwardPhillips Curve graph, aggregate model(side-by- side)- show the relationship between the Phillips model and the aggregate model if stagflation hits the economy(a supply shock) Draw a grapharrow_forward
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