A-C please and thank you! An economy is currently in a recession.inflatinLRPC(a) Draw a single correctly labeled graph with both the short-run and long-run Phillips curves. Label thecurrent short-run equilibrium as point X.SRPCUnemployment.(b) Is the expected inflation rate greater than, less than, or equal to the actual inflationrate? The expected inflation rate will bebe less than the actual inflationrate(c) Will borrowers with fixed-rate loans benefit from the situation that you identified in part (b)?Explain. Borrowers with Fixed-rate loans will benefit from such situationbecause the value of the loan will decreasewith a lower Inflation ralewith(d) Assume the government budget is balanced. In the absence of any discretionary policy action, willthe government budget move into surplus, deficit, or remain in balance?Explain. The government budget will remain in balance in the absence of—anyany discretionary policy(e) On your graph in part (a), show how the economy will adjust in the long run in the absence of anydiscretionary policy action.(f) Now assume instead the government increases spending without changing taxes to close therecessionary gap. What effect will this policy have on the nationaldebt?in government spending without changing taxes willAn increasecause the national debt to increase

An economy is currently in a recession. (a) Draw a single correctly labeled graph with both the short-run and long-run Phillips curves. Label the current short-run equilibrium as point X. inflahen LRPC SRPC Unemployment. (b) Is the expected inflation rate greater than, less than, or equal to the actual inflation rate? The expected inflation rate will be less than the actual inflation rake (c) Will borrowers with fixed-rate loans benefit from the situation that you identified in part (b)? Explain. Borrowers with Fixed rate loans will benefit from such situatione because the value of the iman will decrease a lower Inflation rate

An economy is currently in a recession. (a) Draw a single correctly labeled graph with both the short-run and long-run Phillips curves. Label the current short-run equilibrium as point X. inflahen LRPC SRPC Unemployment. (b) Is the expected inflation rate greater than, less than, or equal to the actual inflation rate? The expected inflation rate will be less than the actual inflation rake (c) Will borrowers with fixed-rate loans benefit from the situation that you identified in part (b)? Explain. Borrowers with Fixed rate loans will benefit from such situatione because the value of the iman will decrease a lower Inflation rate

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Unemployment And Inflation

Section: Chapter Questions

Problem 4.10P

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