Quiz_290 - SHORTANSWER. 128 .The .Use aPhillipscurveg

Quiz_290 - SHORTANSWER. 128 .The .Use aPhillipscurveg

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SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 128) Suppose the current inflation rate and the expected inflation rate are both 3 percent. Thecurrent unemployment rate and the natural rate of unemployment are both 4 percent. Usea Phillips curve graph to show the effect on the economy of a severe supply shock. If theFederal Reserve keeps monetary policy unchanged, what will eventually happen to theunemployment rate? Show this on your Phillips curve graph.128) Diff: 2 Page Ref: 964 - 965/590 - 591 Topic: Supply Shocks and the Phillips Curve Learning Outcome: Macro 13: Discuss the key measures, theories, and effects of inflation and deflation AACSB: Analytic Skills 129) Why is the credibility of the Fedʹs policy announcements particularly important? 129)
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