Ldquothe philips curve and the aggregate supply curve are, Ask an Expert

Economics

“The Philips curve and the aggregate supply curve are two sides of the same coin.” (Mankiw P. 406, 8th Edition). Suppose the natural rate of unemployment is 6% and the expected rate of inflation is 5%.

a. On a single graph, draw the short-run and long-run Phillips curve.

b. Compare and contrast the effects of an unanticipated and anticipates increase in the money supply growth rate. [It will be helpful to refer to the chapter 13 supplemental slides.]

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