8a. Assume that an economy is at equilibrium at its potential GDP at $10 trillion and aprice level of 100. What would be the short-run impact of a significant fall in consumer confidence about the future? Provide an AD/AS model to support your answer. b. What policy would you recommend to the chairperson of the Federal Reserve? Be specific. Show the effect of this policy on your graph part a. c. What are the major goals of the Fed's monetary policy?

Q: 6. Your day as chair of the Fed (II): With the goal of stabilizing output, explain how and why you…

A: Disclaimer- “Since you have asked multiple question, we will solve the first three question for you…

Q: 3. Suppose U.S. aggregate output is still below potential by 2018, when a new Fed chair is…

A: When the central bank is in favor of an increase in the nominal money supply level, this is an…

Q: Assume that initially everyone expected the price level to stay the same when the Federal Reserve…

A: here, AS is Aggregate supply AD is Aggregate demand

Q: Suppose country A has a central bank with full credibility, and country B has a central bank with no…

A: Central banks serve a critical function in the worldwide economy by controlling monetary policies,…

Q: 1.True or False: Businesses and government care only about long-run economic forecasts, because they…

A: Answer 1 The correct answer is option - True Reason behind the answer- Firms and governments find it…

Q: For the January 2020 Press Release, answer the following question. A.  For Column 8, complete the…

A: In column 8 we have Fed Funds Target Rate. As per the given press release of January 2020 by the…

Q: 16. If an economy suffers simultaneous negative aggregate demand and aggregate supply shocks, and…

A: Negative aggregate demand shocks decrease the aggregate demand at each price level and shift the…

Q: Suppose an economy attains its long-run equilibrium at last year. However, after the start of the…

A: (a) If aggregate demand is high, this shifts AD curve rightward, increasing both price level and…

Q: Suppose the government passes a temporary "gas tax holiday," removing the federal tax on gasoline…

A: A temporary decrease in the gas tax is known as a gas tax holiday. Gas tax payers will benefit from…

Q: The Short-Run Aggregate Supply Curve (AS) is given by: y=20p And the Short-Run Aggregate Demand…

A: Given, The Short-Run Aggregate Supply Curve (AS) is given by:y=20pAnd the Short-Run Aggregate Demand…

Q: Consider the demand for an inferior good illustrated in the graph below. Suppose income increases.…

A: Inferior goods are those goods whose demand falls when the income of the consumer increases. This…

Q: 2. The graph below shows the AD-AS model in short-run equilibrium at a price level, Po, and a level…

A: The aggregate demand in the economy shows the total spending done by various sectors of the economy…

Q: The following graph shows the short-run aggregate supply (SRAS) and aggregate demand (AD) curves for…

A: DISCLAIMER  “Since you have asked multiple question, we will solve the first question for you. If…

Q: Price level (GDP deflator, 2009 = 100) P1 LRAS₁ GDP* SRASI GDP₁ Real GDP (trillions of 2009 dollars)…

A: Macroeconomic analysis, which gives essential information on a country's financial health, is the…

Q: 9. In response to the Great Recession, the Federal Reserve took drastic and largely untested…

A: A significant global economic slowdown known as "The Great Recession" started in 2008 and lasted…

Q: 08. Which of the following could have caused a shift of the Aggregate Expenditures curve from AE1 to…

A: The correct answer is (c), an improvement in consumer confidence.Consumer spending increases when…

Q: If the long run macro aggregate supply curve is fixed and vertical, then after all is said and done…

A: Aggregate supply is the total amount of goods and services that the producers of the economy are…

Q: In the figure at right, assume the economy starts out in equilibrium at point d. If the Fed…

A: Money supply is a monetary tool which is used by central bank , to control the inflation and…

Q: We often say that responding to a negative AD shock is the easiest scenario for the Fed to respond…

A: Aggregate demand:Aggregate Demand is when the total number of consumers have the desire to buy…

Q: If there is a temporary demand shock (the demand decreases) and the Fed or the government decides to…

A: Demand shock refers to a situation that leads to a change in the demand for output for a shorter…

Q: Oil prices have risen quite a bit in the last four months.  Use the AD-AS model (along with a labor…

A: An increase in oil price increases the costs of production in an economy. A higher cost of…

Q: Consider the above situation (in question 1) when the economy has been hit by a negative (temporary)…

A: The total amount of finished products and services demanded in an economy is aggregate demand. The…

Q: Given the following information about the economy, determine the appropriate economic policy as well…

A: Economic policy is the policy that aims at multiple objectives like price stability, economic…

Q: 1. Explain what will take place in an SRAS-AD diagram if the Fed expands the money supply.

A: DISCLAIMER  “Since you have asked multiple questions, we will solve the first question for you. If…

Q: 2. Give examples of factors that decrease short-run aggregate supply. Which way does the SAS curve…

A: Aggregate supply is the total output that the producer is willing to produce and sell at different…

Q: 5. A consumption boom: Using the IS-MP diagram, explain what happens to the economy if there is a…

A: For a certain inflation rate, the IS/MP model represents the equilibrium in the money and goods…

Q: Let's say the Aggregate Demand is less than potential output. Our goal is to keep the short run…

A: Option B is correct Increase interest rates and increase taxes