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Economics The following questions have you use the dynamic aggregate demand-aggregate supply model. The natural rate of unemployment (u) is assumed to be 4% for
Economics The following questions have you use the dynamic aggregate demand-aggregate supply model. The natural rate of unemployment (u") is assumed to be 4% for each question. inflation rate (P) 10.0% Solow Growth Curve 9.0% SRAS (P = 2%) 8.0% 7.0% 6.0%% 5.08% 4.0% 3.0%% 2.0%% 1,0%% 0,0% -10 -2.0 AD (M + V =5%) growth rate of -3.0% real GDP (Y . ) -30% 2.0% -1.0% 0.06 1.0%% 2.0%6 3.0% 40%6 5.0%% 6.0% 7.0% 80% 90% 100% 36. The economy starts at an intitial long-run equilibrium shown above. a. The equilibrium growth rate of real GDP is and the inflation rate is b. The cyclical unemployment rate (u - u") is and the actual unemployment rate (u) is 37. Suppose that the growth rate of aggregate demand (M + V) increases to 10 percent
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