ALL Phillips Curve FRQ's

ALL Phillips Curve FRQ's

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2019 AP Macroeconomics Exam

(A.) Draw a Phillips curve graph, label the short-run equilibrium as point X and plot the values.

(B.) Is the actual inflation rate greater, less or equal to the expected inflation rate?

(C.) Assume loans were made taking into account the expected inflation rate of 3%.

Will lenders be better off, worse off after they realize the actual inflation rate in part B?

Explain.

When lenders create loans they build into the loan the expected

inflation rate if actual inflation is unexpectedly lower

then lenders will.

(D.) Based on the relationship between the natural and the actual inflation rate what will happen to the Natural Rate of Unemployment in the Long Run?

The Natural Rate of Unemployment = (No Change)

Recognize that X above is a recession caused by less AD.

This means that cyclical unemployment has increased.

But

The Natural Rate of Unemployment is Frictional & Structural only

the NRU is not effected by changes in AD.

2017 AP Macroeconomics Exam

(A.)

2016 AP Macroeconomics Exam


(A.) 

2013 AP Macroeconomics Exam


(A.) 
(B.) Recognize that the increase in expected inflation = Stagflation

(C.) Increase in Expected Inflation effects the Long Run Phillips Curve how?

The LRPC reflects the Natural Rate of Unemployment

and is not effected by increases in expected inflation

2011 AP Macroeconomics Exam


(A.)

2011B AP Macroeconomics Exam


(A.)
(B.) Consumer confidence falls Consumption falls, AD falls = Recession

(C.) Show the effects of falling consumer confidence

2010 AP Macroeconomics Exam

(A.) Show using an AD/AS curve a country in Less Than Full Employment = Recession.

(B.) Government Spending Increases, AD Increases

(C.) Using a Phillips Curve graph show the increase in military expenditures on the graph.

Understand that increases in government spending 

is a movement up the SRPC

2009 AP Macroeconomics Exam

(A.)

2009B AP Macroeconomics Exam

1. Unemployment > Natural Rate = Recession

(B.) Taxes Decreased = Expansionary Fiscal Policy  

(i) AD Increase

(ii) Show a decrease in taxes on the SRPC

An increase in AD is a movement up the SRPC

2008 AP Macroeconomics Exam

(A.) Show a decrease in consumer spending (AD) on the SRPC

A decrease in AD is a movement down the SRPC

2005 AP Macroeconomics Exam

(A.) Draw a graph of the SRPC showing actual and inflation rates for both years.

(B.) SRAS shifts left = (Stagflation = Negative Supply Shocks = Cost Push Inflation)
(i) Identify one factor that could cause the SRAS to shift left

Wages Increase = Stagflation

Oil prices increase = Negative Supply Shock

Expected Inflation = Cost Push Inflation

(ii) On the graph show the leftward shift of the SRAS curve

(C.) Assume the NRU is 5%, show it drawing a graph using the LRPC.

(D.) What is the relationship between inflation and unemployment in the Long Run?

No trade-off between Inflation and Unemployment in the LR.

2005B AP Macroeconomics Exam

(A.) Using a correctly labeled graph of the Money Market, show a sale of bonds on the,

(i) Money Supply

(ii) Interest Rate

(B.) Nominal or Real Interest Rate?

Selling Bonds is contractionary reducing the MS and increasing the Nominal Interest Rate

(C.) Under what conditions will Nominal rates differ from Real?

If there is Inflation the Real will not equal the Nominal

Nominal - Inflation = Real

Real + Inflation = Nominal

Real = Nominal when Inflation Rate = 0

(D.) Using an AD/AS graph show the effect of the FED selling bonds.

Selling Bonds is contractionary, NIR Increases, Investment Decreases and AD Decreases

(E.) Draw a Phillips curve showing the Open Market Operation (selling bonds) effect on the following,

(i) Unemployment Rate

(ii) Inflation Rate

Fed Sells Bonds, AD decreases, PL decreases, Output decreases, Unemployment Increases 

2004B AP Macroeconomics Exam

(A.) Using an AD/AS graph, show an increase in the price of oil and its effects on the following,
(i) Real Output
(ii) Price Level

Oil Price Increase, shifts the SRAS curve Left, creates
Stagflation
Cost Push Inflation
But most often referred to as
Negative Supply Shock
Real Output decreases and the PL increases

(B.) Using a Phillips curve graph show the effect of higher oil prices.

Stagflation, a left ward shift of the SRAS curve
is
a rightward shift of the SRPC
as
Inflation and Unemployment Increase

2003 AP Macroeconomics Exam

(A.) Draw a SRPC & LRPC for Country X.

(B.)

(i) 

(ii) 

(C.) Effect of increase in unemployment benefits