Consider a baseline short run equilibrium where output is 16 trillion dollars, and the price level is 20. Note: In the Long Run Steady State Equilibrium, Price expectation is the same as price level & unemployment is 5% or lower. None of these are guaranteed in the short run. Usually, short run equilibrium is called an underemployment equilibrium. • Starting from the baseline, suppose COVID 19 hits this economy. Question What policies would you propose now (Monetary/Fiscal; Expansionary/contractionary)? As you know by now there are many different ways to implement Fiscal and Monetary policies. Which method did you select? (Cutting taxes, increasing taxes,reducing government expenditure, increasing government expenditure for fiscal policies, & lowering reserve ratio, increasing reserve ratio, OMO buying bonds, OMO selling bonds etc. for monetary policies.)
• Consider a baseline short run equilibrium where output is 16 trillion dollars, and the price level is 20. Note: In the Long Run Steady State Equilibrium, Price expectation is the same as price level &
• Starting from the baseline, suppose COVID 19 hits this economy.
Question
What policies would you propose now
(Monetary/Fiscal; Expansionary/contractionary)?
As you know by now there are many different ways to
implement Fiscal and
method did you select?
(Cutting taxes, increasing taxes,reducing government expenditure, increasing government expenditure for fiscal policies, & lowering reserve ratio, increasing reserve ratio, OMO buying bonds, OMO selling bonds etc. for monetary policies.)
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