Which of the following would shift the long-run Phillips curve to the right? a. A decrease in aggregate demand b. A decrease in expected inflation c. An increase in aggregate demand d. An increase in the minimum wage

SOLVED:The imaginary country of Harris Island has the aggregate supply and aggregate demand curves as Table 24.3 shows. a. Plot the AD/AS diagram. Identify the (i) equilibrium. b. Would you expect unemployment in this economy to be relatively high or low? c. Would you expect concern about inflation in this economy to be relatively high or low? d. Imagine that consumers begin to lose confidence about the state of the economy, and so AD becomes lower by 275 at every price level. Identify the new a

SOLVED:If no fiscal policy changes are made, suppose the current aggregate demand curve will increase horizontally by 1,000 billion and cause inflation. If the marginal propensity to consume (M P C) is 0.80, federal policymakers could follow Keynesian economics and restrain inflation by decreasing a. government spending by 200 billion. b. taxes by 100 billion. c. taxes by 1,000 billion. d. government spending by 1,000 billion.

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The economy is in short-run macroeconomic equilibrium at point ... | Filo

The economy is in short-run macroeconomic equilibrium at point E1 in the accompanying diagram. Based on the diagram, answer the following questions. a. Is the economy facing an inflationary or a recessionary gap? b. What policies can the government implement that might bring the economy back to long-run macroeconomic equilibrium? Illustrate with a diagram. c. If the government did not intervene to close this gap, would the economy return to long-run macroeconomic equilibrium? Explain and illustr