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Q1: the Phillips curves
1. a. Graph the Phillips curve.
2. b. Write down the equation that represent the Philips curve.
3. c. If the labor market is tight, what is the effect on the production cost and the
aggregate supply curve.
4. d. Fill in the blanks: If expected inflation increases, nominal wages ________ to
prevent real wages from
Q2: use the AD-AS model (in the S-R and L-R) to demonstrate and to analyze the effect of a
decrease in the natural rate of unemployment on the total output and the inflation rate. ( /1.5