This gap is called inflationary since it results in a persistent rise in general prices in the economy. Answer and Explanation: A policy that will not help return the economy to the potential real GDP B. Decrease marginal...
Suppose you are in charge of U.S. fiscal policy and the economy is in recession. What would you do?Fiscal Policy:Fiscal policy refers to the policies that are backed by the federal government and where the government influences economic factors by adjusting...
Answer to: Suppose the economy seems to be shifting from a boom to a recession. Will this cause the yield to maturity of bonds to increase or...
Suppose the expected inflation rate is 5% and the actual inflation rate is 7%. According to Friedman, is the economy in long-run equilibrium? Explain your answer. Using the real business cycle model, show that a recession could arise either through...
Suppose the price level and GDP both fell. GDP then increased, but the price level fell even further. Was this a demand-side shock, a supply-side shock, or a combination of both? Explain. 1. Suppose the economy is ini...
Suppose that actual inflation is 2% which is target inflation rate, output growth is 2%, which is 1% below potential (Y*), and actual federal funds rate is 5%. a. Use the Taylor rule to predict the Consider the T...
Suppose that money demand is given by Md = $Y * (0.30 - i) Where $Y is $200. Also, suppose that the supply of money is $25. What is the equilibrium interest rate ? Money Creation: Money creation is the proces...
market forces however if it breaches any of the boundary than central bank intervenes and take actions. This is generally followed by the emerging economies who want to increase the demand for thier currency in global markets and at the s...
Suppose current equilibrium real GDP is $18 trillion while potential real GDP is $17 trillion. Which one of the following is likely? A. The economy is in a recession B. Aggregate supply will decrease When housing prices fall, this would most li...
Answer to: Suppose that an economy has the Phillips curve \pi = \pi_{-1} - 0.5(u - 5). Graph the short-run and long-run relationships between...