Anticipated increase in the money supply growth rate

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“The Phillips curve and the aggregate supply curve are two sides of the same coin.” (Mankiw P. 406, 8th Edition). Suppose the natural rate of unemployment is 6% and the expected rate of inflation is 5%.

a. On a single graph, draw the short-run and long-run Phillips curve.

b. Compare and contrast the effects of an unanticipated and anticipated increase in the money supply growth rate.

c. Why is the natural rate of unemployment sometimes referred to as the non-accelerating-inflation rate of unemployment (or NAIRU)?

Reference no: EM131109477

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