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Can anybody answer and explain this? 1. (a) TT = ET - B(u - un) + v (b) The Phillips curve tells us that, in

Can anybody answer and explain this?

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1. (a) TT = ET - B(u - un) + v (b) The Phillips curve tells us that, in the short-run: (1) . if we want to reduce inflation, we have to get higher unemployment. . if we want to reduce unemployment, we have to get higher inflation. (c) To decrease the price levels, the Fed must reduce the money supply. The Phillips curve tells us that in order to reduce inflation, unemployment must rise in the short-run. (d) LM will shift left with the decrease in the money supply. (e) In the short-run, output decreases and interest rates increase. (f) AD shifts left. (g) In the short-run, output decreases and prices decrease. There is decreased demand for goods and services, leading to decreased output. Additionally, the flexible-price firms will see the decreased demand and lower their prices. (h) (Using the sticky-price model explanation) When AD shifts left, output falls and firms that are able to adjust prices decrease their prices. Over the long- run, the remaining firms can adjust their prices downward as well, leading to a decrease in price expectations. Thus, the AS curve shifts downward until the market price is equal to the market's expected price. (i) In the long-run, output returns to the long-run level and prices decrease further than the initial short-run decrease

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