At period t, the federal government imposes tariffs on China, which increases prices by 3%. This drives inflation away from the Fed's target. What should you expect to happen next in the IS-LM-MP model? Select all that apply. the output gap becomes negative unemployment decreases over the long run, the output gap goes back to zero the Fed increases interest rates

At period t, the federal government imposes tariffs on China, which increases prices by 3%. This drives inflation away from the Fed's target. What should you expect to happen next in the IS-LM-MP model? Select all that apply. the output gap becomes negative unemployment decreases over the long run, the output gap goes back to zero the Fed increases interest rates

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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To affect the level of potential output, the monetary policy and fiscal policy must Question 1 options: alter short-run aggregate supply. alter short run aggregate demand. affect investment that accelerates capital accumulation. none of the above.
How do new Keynesian ideas about price setting and inflation expectations affect the short-run aggregate supply curve? Explain.
Which of the following is the impulse in the Keynesian business cycle A change by the Fed in the growth rate of the quantity of money An unexpected change in the growth rate of productivity An unexpected change in aggregate demand A change in expectations about the future sales and profits
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Complete the sentences with the correct term. Some options can be used more than once, and some may not be used at all. For the blanks use the answer bank. Cost‑push inflation occurs when decreases until equilibrium output falls below the full employment level.As a result, the increases. One possible cause of cost‑push inflation is an increase in . To combat falling aggregate output, the government may introduce policies to increase to where it and short‑run aggregate supply intersect at the same point.These policies cause to return to its full employment level,and the increases even further.
Assuming a stable short-run supply curve, what will happen if there is a shift in aggregate demand? a) Profits and output increase in the long-run. b) Unemployment decreases in the long-run. c) Profits and output decrease in the short-run. d) Unemployment increases in the short-run. e) Unemployment and prices move in opposite directions in the short-run.
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Which of the following could be responsible for the movement from A to point B? (Refer to attached image) a decrease in taxes a rash of bearishness or stock market crash a downward revision of inflation expectations an upward revision of inflation prices
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The following table describes the aggregate demand curve, where real GDP is expressed as the percent deviation from potential GDP and inflation is expressed as a percentage: Real GDP 2.0 1.0 0.0 -1.0 -2.0 Inflation 19 3.0 4.0 5.0 7.0 9.0 Due to a price shock, inflation increases by 2%. In the long run, what will real GDP be (expressed as the percent deviation from potential GDP)?
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