Question: i only need solution to Part B.... 1st part is just to understand background for you If an economy has the Phillips curve TI= [-1
i only need solution to Part B.... 1st part is just to understand background for you

If an economy has the Phillips curve TI= [-1 - 0.5(u - 0.06) a. What is the natural rate of unemployment? b. Graph the short-run and long-run relationships between inflation and unemployment. c. How much cyclical unemployment is necessary to reduce inflation by 5 percentage points Using Okun's law, compute the sacrifice ratio. d. Inflation is running at 10 percent. The Fed wants to reduce it to 5 percent. Give two scenarios that will achieve that goal. PART B If that the economy is initially at a long-run equilibrium. Then the central bank increases the money supply. a. Assuming any resulting inflation to be unexpected, explain any changes in GDP, unemployment, and inflation that are caused by the monetary expansion. Explain your conclusions using three diagrams: one for the IS LM model, one for the AD-AS model, and one for the Phillips curve. b. Assuming instead that any resulting inflation is expected, explain any changes in GDP, unemployment, and inflation that are caused by the monetary expansion. Once again, explain your conclusions using three diagrams: one for the IS LM model, one for the AD-AS model, and one for the Phillips curve
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