Take a few minutes to organize your thoughts before beginning to write and be sure to answer all parts of each question. Draw the two graphs and provide a brief narrative to explain what it happening. Assume that expected inflation is 3 percent, the natural rate of unemployment is 6 percent, equals 2, and there are no supply shocks. Give an example of a negative supply shock.
Many economists argue that the value of is very large.
Explain your answer. Assume again no technological progress and a positive rate of population growth. Draw graphically and describe the impact of an improvement in technology. The Japanese economy is operating with a large trade surplus, a rising value of the yen, stable prices, and a fairly high level of unemployment. Do likewise for the implementation of expansionary fiscal policy.