1. Inflation is increasingly becoming a concern among economists. One of the heads of Bank of America has predicted that consumer prices will increase by 8% by the end of 2021. Using the AD/SRAS/LRAS graph show how inflation will effect the AD curve. (Start the graph at the macroequilibrium point and show the changes) 2. In the graph that you have drawn in question 1, what is the state of the economy? Using fiscal policy,explain how would you bring the economy back to the macroequilibrium point. 3. In the graph that you have drawn in question 1, what is the state of the economy? Using monetary policy, explain how would you bring the economy back to the macroequilibrium point.
1. Inflation is increasingly becoming a concern among economists. One of the heads of Bank of America has predicted that consumer prices will increase by 8% by the end of 2021. Using the AD/SRAS/LRAS graph show how inflation will effect the AD curve. (Start the graph at the macroequilibrium point and show the changes) 2. In the graph that you have drawn in question 1, what is the state of the economy? Using fiscal policy,explain how would you bring the economy back to the macroequilibrium point. 3. In the graph that you have drawn in question 1, what is the state of the economy? Using monetary policy, explain how would you bring the economy back to the macroequilibrium point.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. Inflation is increasingly becoming a concern among economists. One of the heads of Bank of America has predicted that consumer prices will increase by 8% by the end of 2021. Using the AD/SRAS/LRAS graph show how inflation will effect the AD curve. (Start the graph at the macroequilibrium point and show the changes)
2. In the graph that you have drawn in question 1, what is the state of the economy? Using fiscal policy,explain how would you bring the economy back to the macroequilibrium point.
3. In the graph that you have drawn in question 1, what is the state of the economy? Using monetary policy , explain how would you bring the economy back to the macroequilibrium point.
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