Homework (Ch 22) 3. The long run effects of monetary policy The following graphs show the state of an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second shows the long-run and short-run Phillips curves (LAPC and SRPC). LRS AD LMAS PRICE LEVEL AD . 3 OUTPUT (Trilions of dollars) ? LRPC MacBook Air Homework (Ch 22) LOC SRPC LRPC INFLATION RATE SPC 0 2 12 10 UNEMPLOYMENT RATE Percent) Which of the following statements are true based on these graphs? Check all that apply. The unemployment rate is currently 6% higher than the natural rate of unemployment. The natural level of output is $9 trillion. The current quantity of output is greater than potential output. Suppose the central bank of the economy increases the money supply. MacBook Air Homework (Ch 22) LAPC NFLATION RATE SRPC UNEMPLOYMENT RATE (Percent) 2 1 Which of the following statements are true based on these graphs? Check all that apply. The unemployment rate is currently 6% higher than the natural rate of unemployment. The natural level of output is $9 trillion. The current quantity of output is greater than potential output. Suppose the central bank of the economy increases the money supply. Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves. in the inflation rate, The long run effect of the central bank's policy is In real GDP In the unemployment rate, and Grade It Now Save & Continue Continue without saving MacBook Air