Question Help PC oo 5 Text Problem 4 A shock to aggregate supply will have different outcomes when there are different assumptions about the formation of the level of expected inflation. One path assumes that the level of expected inflation equals tagged Inflation. The level of expected inflation changes over time. The second path assumes the level of expected inflation is anchored to a specific value and never changes. Begin in medium-run equilibrium where actual and expected inflation equal 2% in period Suppose the economy is at initial equilibrium at point A, as shown in the graph on the night, and there is a permanent increase in the price of oil in period 1+1 How does the Philips curve shift? 1. Using the 3-point curved line drawing tool, draw a new Phillips curve that reflects the permanent increase in oil prices. Label your line appropriately UPA le 2.) Using the point drawing tool, indicate where the short-run equilibrium would be as a result of the increase in oil prices Label your point "A" lag 3.) Using the point drawing tool, indicate where the new potential output is located exi Label your point Y." who Carolusy Follow the instructions above and only draw the required objects. pe re What sum Change innamorate Output C: Question Help PC oo 5 Text Problem 4 A shock to aggregate supply will have different outcomes when there are different assumptions about the formation of the level of expected inflation. One path assumes that the level of expected inflation equals tagged Inflation. The level of expected inflation changes over time. The second path assumes the level of expected inflation is anchored to a specific value and never changes. Begin in medium-run equilibrium where actual and expected inflation equal 2% in period Suppose the economy is at initial equilibrium at point A, as shown in the graph on the night, and there is a permanent increase in the price of oil in period 1+1 How does the Philips curve shift? 1. Using the 3-point curved line drawing tool, draw a new Phillips curve that reflects the permanent increase in oil prices. Label your line appropriately UPA le 2.) Using the point drawing tool, indicate where the short-run equilibrium would be as a result of the increase in oil prices Label your point "A" lag 3.) Using the point drawing tool, indicate where the new potential output is located exi Label your point Y." who Carolusy Follow the instructions above and only draw the required objects. pe re What sum Change innamorate Output C