I need help ASAP on 1 and 2
AP Macroeconomics Name Extensions of Macro Homework - 10 Points 1. Interest rates are important in explaining economic activity. a. Using a correctly labeled graph (axes provided below) of the loanable funds market, show how a decision by households to increase savings will affect the real interest rate in the short run. b. Suppose that the nominal interest rate has been 6% and inflation has been 3%. If inflation is now expected to increase from 3% to 5%. determine the value of each of the following in the long run. i) The new nominal interest rate ii) The new real interest rate 2. The unemployment and inflation rates are important indicators of the health of the United States' economy. a. Assume that the economy is currently at long-run equilibrium. In an election year, government officials enact expansionary fiscal policy to win more votes. Using a correctly labeled Phillips curve (axes provided below), show how this policy would affect the unemployment and the rate of inflation. Include the SRPC and LRPC curves. Show the short-run change only. Mark the economy's starting point 1 and the finishing point 2 b. Now assume a negative supply shock hits this economy. Circle below what would happen to the SRPC. SRPC shifts left SRPC shifts right Movement along SRPC c. List two events that could cause the LRPC curve to shift to the left.2. The unemployment and inflation rates are important indicators of the health of the United States' economy. a. Assume that the economy is currently at long-run equilibrium. In an election year, government officials enact expansionary fiscal policy to win more votes. Using a correctly labeled Phillips curve (axes provided below), show how this policy would affect the unemployment and the rate of inflation. Include the SRPC and LRPC curves. Show the short-run change only. Mark the economy's starting point 1 and the finishing point 2 b. Now assume a negative supply shock hits this economy. Circle below what would happen to the SRPC. SRPC shifts left SRPC shifts right Movement along SRPC c. List two events that could cause the LRPC curve to shift to the left