Set up a correctly labeled Phillips Curve graph to begin each scenario.

Then, show and explain below what happens to the short-run Phillips curve. Assume the natural rate of unemployment is 5%. When showing a movement along the curve, label the initial point, A, and the new point, B. Use standard notation when shifting the curve.

  

Transcribed Image Text:

The price of crude oil andmost sources of energy decreases. Governmentspendingincreases. Inflation expectations rise from 3%to6%. The Fed increases interest rateswith contractionary monetary policy. The price of crude oil andmost sources of energy decreases. Governmentspendingincreases. Inflation expectations rise from 3%to6%. The Fed increases interest rateswith contractionary monetary policy.

Answer rating: 100% (QA)

a A rise in government spending represents an increase in aggregate demand ... View the full answer