For each graph, you will need to:

• Correctly label the axes and the curve(s).
• If there is an equilibrium point, correctly label it on both axes and correctly label any shifts and new equilibrium points.

Graph 1: Will be a Phillips Curve Graph

Correctly draw a graph of the short and long-run Phillips Curves.

The graph will represent the economy currently operating in a recession.

• Identify point A on your short-run Phillips Curve to indicate the current state of the economy.
• The Federal Reserve implements an expansionary policy. Identify Point B as a point after the policy has been implemented.
• Assume that the Fed now does not implement the policy above, and nominal wages adjust to a new long-run equilibrium. What happens to nominal wages and the short-run aggregate supply curve?
• Draw the effect that the short-run aggregate supply shift has on the short-run Phillips Curve.

Graph 2: Will be aPPC curve Graph

Graph the following: The country of Brownsonia can produce consumer goods and capital goods, and its natural rate of unemployment is 5%.

• Label point A as a point that shows Brownsonia with an unemployment rate of 9%.
• Show the economy moving out of recession and returning to the natural rate of unemployment.
• What are the 2 possible causes of the economy moving out of recession?
• Show how economic growth will affect Brownsonia's PPC.
• What are the 3 possible causes of economic growth for Brownsonia?

Graph 3: Will be Foreign Exchange Graph

Graph the following: Draw side-by-side graphs of the U.S. dollar and the euro. There is an increase in the supply of the euro.

• Correctly draw the effect this will have on the values of the dollar and the euro.
• What are the 2 possible causes of the increase in the supply of the euro?
• How does this affect the value of the euro and American net exports?

Graph 4: Will be a Foreign Exchange Graph

Graph the following: Draw side-by-side graphs of the U.S. dollar and the yen. There is an increase in demand for the yen.

• Correctly draw the effect this will have on the values of the dollar and the yen.
• What are the 2 possible causes of the increase in demand for the yen?
• How does this affect the value of the yen and American net exports?