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## The following table shows the inflation rate and output leve

Paper help Economics The following table shows the inflation rate and output leve

# The following table shows the inflation rate and output leve

The following table shows the inflation rate and output level for four consecutive periods in… Show more The following table shows the inflation rate and output level for four consecutive periods in a given economy. In period 1, the economy is at its long-run equilibrium(i. e., the inflation rate equals its target and output equals potential output). In period 2 there is a temporary supply shock(e.g., an increase in energy prices). Period Inflation rate(%) Output(\$ trillions) 1 2.5 8 2 4.5 7 3 2.5 6 4 2.5 8 1) Based on the table, determine which type of response was implemented by policy makers(e.g., nothing versus stabilizing inflation or economic activity) %u2192 I think the answer is “stablizing inflation (in the short-run)” 2) Show your argument using a graph(draw the MP curve and the AD/AS diagram consistent with the table data) %u2192 I can draw the AD/ AS diagram on the (inflation rate, Y) plane, but how can I find the equation for MP curve? • Show less

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