Macro HW on Inflation & the Phillips Curve Any Takers?

Need this done by this evening. Any takers?

Homework #13

Inflation & the Phillips Curve

1. Draw a one-time demand-pull inflation cycle in the AD/AS model caused by an increase in the money supply.

2. Draw a one-time cost-push inflation cycle in the AD/AS model caused by supply shock to the economy.

3. Draw what happens in the AD/AS model when an increase in the money supply is correctly anticipated.

4. Draw what happens in the AD/AS model when an increase in the money supply causes inflation to be lower than expected.

5. Draw what happens in the AD/AS model an increase in the money supply causes inflation to be higher than expected.

6. Draw the short-run and the long-run Phillips curve. What is held constant and what is the tradeoff along the short-run Phillips curve?

7. Draw the long-run Phillips curve. Explain what happens to unemployment in the long run.

8. Explain and show by graph the connection between the business cycle as shown by the AD/AS model and the long run Phillips curve.