Philips curve and the aggregate supply curve are two sides

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“The Philips 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 anticipates increase in the money supply growth rate. [It will be helpful to refer to the chapter 13 supplemental slides.]

Reference no: EM13984023

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