Philips curve assume an economy recently suffered a demand, Ask an Expert

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Philips Curve: Assume an economy recently suffered a demand shock and is currently in a recession. Assume that in response to a recession, there is a large boost in government spending

Phillips Curve Continued

a. Starting from a point where short-run output is negative (in a recession), graph (a)(you will need to graph) uses the short-run IS-MP. Label axes, curves, and equilibrium points.

b. Use the Phillips curve model in graph (b)(you will need to graph) to show effects of a large boost in government spending in an economy. Label axes, curves, and equilibrium points.

c. What happens to short-run output if there is an increase in government spending during a recession? Show inference from graph (a).

d. What happens to the change in inflation if there is an increase in government spending during a recession? Show inference from graph (b).

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91233294

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