Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 12 Short Run Macroeconomic Fluctuations
Chapter 35 of 36 The Short-Run Trade-Off Between Inflation and Unemployment
Section 7 of 21
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Figure 4 here
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Figure 4 - How the Long-Run Phillips Curve Is Related to the Model of Aggregate Demand and Aggregate Supply
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Figure 4 shows panel (a) vertical long-run aggregate-supply curve and panel (b) vertical long-run Phillips curve result from the same information.
In panel (a)
· an increase in the money supply
· shifts the aggregate demand curve right from AD1 to AD2
· the long-run equilibrium moves from point A to point B
· price level rises from P1 to P2
Because the aggregate supply curve is vertical, output is the same at A and B.
…
In panel (b) an increase in the money supply raises the inflation rate by moving the economy from point A to point B.
Because the Phillips curve is vertical, the rate of unemployment is the same at A and B.
The vertical long-run aggregate supply curve and the vertical long-run Phillips curve both imply monetary policy influences nominal variables price level and inflation rate but not real variables output and unemployment.
Regardless of the monetary policy pursued by the Fed output and unemployment in the long run stay at their natural rates.
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employment and inflation remain the same
koyō to infure wa kawaranai
雇用とインフレは変わらない



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