A. Mathematical Analysis

1. The short-run aggregate supply (SRAS)

a. What is the SRAS equation?

b. Identify the meaning of the 5 terms in the equation.

c. What is the slope of the SRAS curve?

d. Use the SRAS equation to show that when actual prices are higher than expected prices, actual output is larger than the natural rate of output.

e. What can shift the SRAS curve that is not a shock?

2. The Phillips curve

a. What is the Phillips-curve equation?

b. What are the three forces that influence the inflation rate according to this equation?Identify the terms in the equation that correspond to these forces. What is the relationship between inflation and each of the 3 forces, positive or negative? Put answers in the table below.

. What ISName of Force Term in the equation Relationship with inflation 1.Expected inflation 2. 3