in a certain economy the expectations augmented phillips curve is  

a. Graph the phillips curve of this economy for an expected inflation rate of 0.075. If Fed chooses to keep the actual inflation rate at 0.075. what will be the unemployment rate?

b. An aggregate demand shock decreases the expected inflation to 0.055.Graph the new Phillips curve and comapre it to the curve you drew in part a . What happens to the unemplyment rate if the Fed holds actual inflation at 0.075 ? What happens to the Phillips curve and unemployment rate if fed announces that it will hold inflation at 0.075 after the aggregate demand shock and this announcement is fully believed by the public?

c. Suppose that a supply shock raises the xpected inflation rate to 0.095 and raises the natural unemplyment rae to 0.06 . Repeat part b 

8) What can be concluded from Milton Friedman and Edmund Phelps' expectations-augmented Phillips curve?

A) that there is no long run tradeoff between unemployment and inflation

B) that there is a short run tradeoff between unemployment and inflation

C) that there are two types of Phillips curves

D) all of the above

E) none of the above

9) Given the accelerationist Phillips curve ?? = - 0.3 (U - 6) + ?, suppose that inflation in the preceding period was 3 percent, unemployment is 6 percent, and there is a price shock of 2 percent. The current inflation rate is ________.

A) 3 percent

B) 0.2 percent

C) 5 percent

D) 1 percent

E) none of the above

10) Which of the following shows a negative relationship between the output and unemployment gaps?

A) the AS curve

B) the Phillips curve

C) Okun's law

D) the classical dichotomy

E) none of the above

Now that we have learned that the Short-Run Phillips Curve (SRPC) shows the tradeoff between inflation and unemployment at the given natural unemployment rate and expected inflation rate, discuss which is worse, too much inflation or too much unemployment. Please apply the effects of the SRPC as explained in the textbook when sharing your discussion.

The above graph depicts the short-run and long-run Phillips Curves for a hypothetical economy in macroeconomic equilibrium at point A, where the natural rate of unemployment is 4% and the current inflation rate is 10% per year.

Suppose that the central bank in this economy is concerned that the inflation is too high, and wants to lower the inflation rate by 4 percentage points per year. A reduction in the rate of inflation is called _____. To reduce inflation from 10% to 6% in the short-run, the central bank would have to accept an unemployment rate of _%

True or false: If people have rational expectations, the economy may not have to endure an unemployment rate as high as predicted by the short-run Phillips curve.