In 2024, the U.S. economy is struggling. Unemployment has jumped. Trouble began in January 2023, with a spike in oil prices, generated by terrorist bombing of important production fields in Saudi Arabia. In January 2024, a second blow hits the economy, when households become much more risk averse, as they panic about corporations' high debt levels. The table below provides an incomplete list of macro data. Note: Inflation expectations are derived from the treasury 10-year TIPS spread. The Government borrows virtually all of its funds by issuing 10-year treasury notes. 2022:04 2023:04 2024:24 Crude oil price ($/bbl) $50 Key values: Unemployment 4% 5% 6% LTSG = 2.5% Consumer Price Index (CPI), year-on-year, % change 2.0% 4.8% -1.1% U* = 4% CPI: index level 100 T* = 2% CPI, excluding oil, year-on-year, % change 2.00% oil = 10% of CPI Real U.S. output: index level 100 98 96 Phillips curve a = 0.5 Federal Government spending $2.0 trillion $2.2 trillion $2.5 trillion Federal taxes collected $1.7 trillion $1.3 trillion $1.2 trillion corporate borrowing level $200 billion Corporate/Government bond spread 2.00% 2.00% 4.00% 10-year Government bond yield 2.50% 10-year yield minus TIPS yield 2.00% 2.50% 2.00% For 2024, using the graph and the information in the table above, determine the equilibrium levels in the government quadrant, and draw the curves that intersect at this new equilibrium. Again, for 2024, using the graph and the information in the table above, determine the equilibrium levels in the corporate quadrant, and draw the curves that intersect at this new equilibrium. In 2024, the U.S. economy is struggling. Unemployment has jumped. Trouble began in January 2023, with a spike in oil prices, generated by terrorist bombing of important production fields in Saudi Arabia. In January 2024, a second blow hits the economy, when households become much more risk averse, as they panic about corporations' high debt levels. The table below provides an incomplete list of macro data. Note: Inflation expectations are derived from the treasury 10-year TIPS spread. The Government borrows virtually all of its funds by issuing 10-year treasury notes. 2022:04 2023:04 2024:24 Crude oil price ($/bbl) $50 Key values: Unemployment 4% 5% 6% LTSG = 2.5% Consumer Price Index (CPI), year-on-year, % change 2.0% 4.8% -1.1% U* = 4% CPI: index level 100 T* = 2% CPI, excluding oil, year-on-year, % change 2.00% oil = 10% of CPI Real U.S. output: index level 100 98 96 Phillips curve a = 0.5 Federal Government spending $2.0 trillion $2.2 trillion $2.5 trillion Federal taxes collected $1.7 trillion $1.3 trillion $1.2 trillion corporate borrowing level $200 billion Corporate/Government bond spread 2.00% 2.00% 4.00% 10-year Government bond yield 2.50% 10-year yield minus TIPS yield 2.00% 2.50% 2.00% For 2024, using the graph and the information in the table above, determine the equilibrium levels in the government quadrant, and draw the curves that intersect at this new equilibrium. Again, for 2024, using the graph and the information in the table above, determine the equilibrium levels in the corporate quadrant, and draw the curves that intersect at this new equilibrium
