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The following graphs plot the long-run equilibrium situation for an economy. The first graph plots the aggregate demand (AD) and long-run aggregate supply (LRAS) curves.
The following graphs plot the long-run equilibrium situation for an economy. The first graph plots the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second graph plots the long-run and short-run Phillips curves (LRPC and SRPC, respectively). LRAS O AD LRAS PRICE LEVEL AD 0 2 3 5 6 OUTPUT (Trillions of dollars)LRPC O SRPC O LRPC INFLATION RATE SRPC 0 2 4 6 8 10 12 UNEMPLOYMENT RATE (Percent)Which of the following statements are true based on these graphs? Check all that apply. [J The natural level of output is 6%. [) 1t is impossible to determine the natural rate of unemployment from these graphs alone. [ The natural rate of unemployment is 6%. Suppose the central bank of the economy pursues a policy that decreases the money supply. Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves. The long-run effect of the central bank's policy is W in the inflation rate, w in real GDP. W in the unemployment rate, and
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