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G ng.cengage.com C Project 7: Expectation The... MindTap - Cengage Learni... 2. The Phillips Curve In Th... 2. The Phillips Curve In Th... 2. The Phillips Curve In Th... 2. The Phillips Curve In Th... D G Ang.cengage.com Pro... [Solved] In the year 2020,... + > > CENGAGE MINDTAP Q Search this course Homework: Expectations Theory and the Economy (Ch 16) X Attempts Average / 5 2. The Phillips curve in the short run and long run A-Z In the year 2020, aggregate demand and aggregate supply in the fictional country of Demet are represented by the curves AD202and AS on the following graph Suppose Natural Real GDP in this economy is $6 trillion. On the following graph, use the green line (triangle symbol) to plot the long-run aggregate supply (LRAS) curve for this economy. 1 2 108 bongo A 107 LRAS SRAS 106 D B 105 Outcome C 104 At PRICE LEVEL AD 2020 103 AD 102 A AD A 101 100 0 6 8 10 12 14 16 REAL GDP (Trillions of dollars) Economists have forecast that if the government does nothing and the economy continues to grow at the current rate, aggregate demand in 2021 will be given by the ADAcurve, resulting in the outcome illustrated by point A. If the government pursues an expansionary policy, aggregate demand in 2021 will be given by the ADBcurve, resulting in the outcome illustrated by point B. The following table gives projections for the unemployment rates that would occur at point A and point B. Consider what the rate of inflation would be between 2020 and 2021, depending on whether the economy moves from the initial price level of 102 to the price level at outcome A or the price level at outcome B. G ng.cengage.com C Project 7: Expectation The... MindTap - Cengage Learni... 2. The Phillips Curve In Th... 2. The Phillips Curve In Th... 2. The Phillips Curve In Th... 2. The Phillips Curve In Th... D G Ang.cengage.com Pro... [Solved] In the year 2020,... + CENGAGE | MINDTAP Q Search this course Homework: Expectations Theory and the Economy (Ch 16) X A-Z Complete the table by entering the inflation rate at each potential outcome point. Note: Calculate the inflation rate to two decimal points of precision. Unemployment Rate Inflation Rate A 6% 3% Use the following graph to help you answer the questions that follow. (Note: You will not be graded for any adjustments made to this graph.) (?) -+ SRPC 2021 LRPC INFLATION RATE (Percent) UNEMPLOYMENT RATE (Percent) Based on your answers to the previous questions, use the black line (plus symbol) to draw the short-run Phillips curve for this economy in 2021 (SRPC202). The short-run Phillips curve is line: Representing the tradeoff between unemployment and inflation At Natural Real GDP At the natural rate of unemployment Now consider the long-run effects of this policy. Suppose, in particular, that following implementation of the policy, the aggregate demand curve remains at ADB. Designate the long-run equilibrium that would follow such a policy as outcome C. Going back to the first graph, place the grey point (star symbol) at outcome C. Because output at point C is Natural Real GDP, the unemployment rate associated with outcome C is the natural rate of unemployment