The aggregate demand curve is Y = 75 - 3?, and the short-run aggregate supply curve is ? = 6.2 + 0.8(Y - 70). Assuming adaptive expectations, calculate the inflation rate and output for the next period
What will be an ideal response?
These curves intersect with Y = 66 and ? = 3. By adaptive expectations, the short-run aggregate supply curve for next period is ? = 3 + 0.8(Y - 70). This curve intersects aggregate demand where Y = 68.82 and ? = 2.06.
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