Tackle the Test: Free-Response Questions

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  1. Question

    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

    Rubric for FRQ 1 (8 points)

    image

    1 point: Vertical axis labeled “Inflation rate”

    1 point: Horizontal axis labeled “Unemployment rate”

    1 point: Downward-sloping curve labeled “SRPC0

    1 point: Vertical curve labeled “LRPC

    1 point: SRPC0 crosses horizontal axis where it crosses LRPC

    1 point: NAIRU is labeled where SRPC0 crosses LRPC and horizontal axis

    1 point: New SRPC is labeled, for example as “SRPC',” and shown above the original SRPC0

    1 point: When the unemployment rate moves below the NAIRU, it creates inflation and moves the economy to a point such as A. This leads to positive inflationary expectations, which shift the SRPC up as shown by SRPC'.

  2. Question

    Consider the accompanying figure.

    image
    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