Draw a Phillips curve graph here that shows a natural rate of unemployment of 4% and a current inflation rate of 2%. Make sure your lines and axes are labeled and your graph is complete!Use your knowledge of The Phillips Curve to answer the following questions.The threat of future inflation:makes people reluctant to loan money for long periods.makes people eager to loan money for long periods.has no effect on loaning money.increases the value of money paid back in the future.makes people reluctant to borrow money for long periods. According to the short-run Phillips Curve, there is a trade-off between:interest rates and inflation.the growth of the money supply and interest rates.unemployment and economic growth.inflation and unemployment.economic growth and interest rates. Which of the following is true of the long-run Phillips curve? it shows there is a trade-off between unemployment and inflation. it is positively sloped when the inflation rate exceeds the unemployment rate. it is vertical at the natural rate of unemployment. it shifts to the right if aggregate demand increases. it is created by an adverse supply shock. Assume that the table below shows the unemployment and inflation data for Canada. Unemployment RateInflation Rate19952%8%19965%4%Draw a correctly labeled graph of the short run PHillips curve for Canada, showing the unemployment and inflation rates for both years.Now, assume that the natural rate of unemployment for Canada is 5%. Add a LRPC to your graph.What is the relationship between unemployment and inflation in the long run?Was the change in the economy from 1995 to 1996 a good one? How do you know?

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Answered: Draw a Phillips curve graph here that…

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter17: Stabilizing The National Economy

Section: Chapter Questions

Problem 24AA

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Draw a Phillips curve graph here that shows a natural rate of unemployment of 4% and a current inflation rate of 2%.

Make sure your lines and axes are labeled and your graph is complete!

Use your knowledge of The Phillips Curve to answer the following questions.

The threat of future inflation:

makes people reluctant to loan money for long periods.
makes people eager to loan money for long periods.
has no effect on loaning money.
increases the value of money paid back in the future.
makes people reluctant to borrow money for long periods.

According to the short-run Phillips Curve, there is a trade-off between:

interest rates and inflation.
the growth of the money supply and interest rates.
unemployment and economic growth.
inflation and unemployment.
economic growth and interest rates.

Which of the following is true of the long-run Phillips curve?

it shows there is a trade-off between unemployment and inflation.
it is positively sloped when the inflation rate exceeds the unemployment rate.
it is vertical at the natural rate of unemployment.
it shifts to the right if aggregate demand increases.
it is created by an adverse supply shock.

Assume that the table below shows the unemployment and inflation data for Canada.

	Unemployment Rate	Inflation Rate
1995	2%	8%
1996	5%	4%

Draw a correctly labeled graph of the short run PHillips curve for Canada, showing the unemployment and inflation rates for both years.
Now, assume that the natural rate of unemployment for Canada is 5%. Add a LRPC to your graph.
What is the relationship between unemployment and inflation in the long run?
Was the change in the economy from 1995 to 1996 a good one? How do you know?

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