Plz help now The graph shows the short-run and long-run Phillips curves. The current inflationrate is 5 percent a year.Inflation rate (percent per year)12.5LRPCThe Fed announces that it will slow the money growth rate so that inflation will fallto 2.5 percent a year. If no one believes the Fed, but the Fed keeps inflation at 2.5percent for many years, explain the effect of the Fed's action on inflation andunemployment.10.0-O A. The inflation rate and unemployment rate fluctuate: first unemploymentrises above 6 percent, then falls below 6 percent, and finally returns to 6percent. The inflation rate keeps falling through this cycle inunemployment.7.5-5.0-O B. At first, the unemployment rate rises above 6 percent and the inflationrate falls. Later, as the inflation rate approaches 2.5 percent a year, theunemployment rate falls toward 6 percent.SRPC2.5-O C. No changes occur to either the inflation rate or the unemployment rate.Changes only occur if people believe the Fed.>O D. The inflation rate falls toward 2.5 percent and the unemployment rate0.0-10remains constant at 6 percent.Unemployment rate (percent of labor force)O E. At first, the unemployment rate falls below 6 percent and the inflation ratefalls. Later, as the inflation rate approaches 2.5 percent a year, theunemployment rate rises toward 6 percent.emptsNext

A Phillips Curve is a curve that shows the converse connection between joblessness, as a rate, and…

The graph shows the short-run and long-run Phillips curves. The current inflation rate is 5 percent a year. The Fed announces that it will slow the money growth rate so that inflation will fall to 2.5 percent a year. If no one believes the Fed, but the Fed keeps inflation at 2.5 percent for many years, explain the effect of the Fed's action on inflation and unemployment. O A. The inflation rate and unemployment rate fluctuate: first unemployment rises above 6 percent, then falls below 6 percent, and finally returns to 6 percent. The inflation rate keeps falling through this cycle in unemployment. B. At first, the unemployment rate rises above 6 percent and the inflation rate falls. Later, as the inflation rate approaches 2.5 percent a year, the unemployment rate falls toward 6 percent. O C. No changes occur to either the inflation rate or the unemployment rate. Changes only occur if people believe the Fed. D. The inflation rate falls toward 2.5 percent and the unemployment rate remains constant at 6 percent. O E. At first, the unemployment rate falls below 6 percent and the inflation rate falls. Later, as the inflation rate approaches 2.5 percent a year, the unemployment rate rises toward 6 percent.

The graph shows the short-run and long-run Phillips curves. The current inflation rate is 5 percent a year. The Fed announces that it will slow the money growth rate so that inflation will fall to 2.5 percent a year. If no one believes the Fed, but the Fed keeps inflation at 2.5 percent for many years, explain the effect of the Fed's action on inflation and unemployment. O A. The inflation rate and unemployment rate fluctuate: first unemployment rises above 6 percent, then falls below 6 percent, and finally returns to 6 percent. The inflation rate keeps falling through this cycle in unemployment. B. At first, the unemployment rate rises above 6 percent and the inflation rate falls. Later, as the inflation rate approaches 2.5 percent a year, the unemployment rate falls toward 6 percent. O C. No changes occur to either the inflation rate or the unemployment rate. Changes only occur if people believe the Fed. D. The inflation rate falls toward 2.5 percent and the unemployment rate remains constant at 6 percent. O E. At first, the unemployment rate falls below 6 percent and the inflation rate falls. Later, as the inflation rate approaches 2.5 percent a year, the unemployment rate rises toward 6 percent.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: The Short-run Trade-off Between Inflation And Unemployment

Section: Chapter Questions

Problem 6CQQ

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