# Super-difficult exam question - NK supply curve

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#1
"Present the derivation of the New Keynesian supply curve, when the nominal (money) wage is fixed, by contracts, in the short run. Use the four-panel AS diagram."

I have no clue how to do this Anyone is able to solve this? Or at least link me to articles that would give me an idea? I'm revising for exams and this question just killed me.
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5 years ago
#2
???? Lol what exam board are you doing Im doing AQA A2 and Ive never heard of questions this difficult lol.
I`d say first (advice by my teacher) define two things, so maybe define supply and demand?
Then Im not sure...sorry
Why dont you try going on Tutor2u (its a revision site for subjects including economics)?
Or maybe have a look at the mark scheme for the question?
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5 years ago
#3

You can derive the new Keynsian supply curve using okun's rule of thumb (the relationship between output and unemployment) and the Phillips curve (the relationship between unemployment and inflation). It's easy to derive geometrically (i.e. With graphs) but it is still easily doable with algebra. I can't be bothered to try and type it all out, but hope this helps.
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#4
http://oi61.tinypic.com/otmfpj.jpg

this is what i've done so far, but i have no clue how to include okun's law or phillips curve here.
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