Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer. Assume that a country's economy is in a short-run equilibrium and the actual unemployment rate is lower than the natural rate of unemployment. (a) Using a correctly labeled graph of the long-run aggregate supply curve, short-run aggregate supply curve, and aggregate demand curve, show each of the following. (i) Current price level, labeled PL₁, and current output level, labeled Y₁ (ii) The full-employment output level, labeled YF (b) Assume the country's banking system has ample reserves. What monetary policy action should the country's central bank use to move the economy toward its long-run equilibrium? (c) Draw a correctly labeled graph of the country's reserve market, and show how the central bank's action to move the economy toward its long-run equilibrium affects the policy rate in the short run.

Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer. Assume that a country's economy is in a short-run equilibrium and the actual unemployment rate is lower than the natural rate of unemployment. (a) Using a correctly labeled graph of the long-run aggregate supply curve, short-run aggregate supply curve, and aggregate demand curve, show each of the following. (i) Current price level, labeled PL₁, and current output level, labeled Y₁ (ii) The full-employment output level, labeled YF (b) Assume the country's banking system has ample reserves. What monetary policy action should the country's central bank use to move the economy toward its long-run equilibrium? (c) Draw a correctly labeled graph of the country's reserve market, and show how the central bank's action to move the economy toward its long-run equilibrium affects the policy rate in the short run.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Sub : Economics
Pls answer very faast.I ll upvote. Thank You

Include correctly labeled diagrams, if useful or required, in explaining your answers. A
correctly labeled diagram must have all axes and curves clearly labeled and must
show directional changes. If the question prompts you to "Calculate," you must show
how you arrived at your final answer.
Assume that a country's economy is in a short-run equilibrium and the actual
unemployment rate is lower than the natural rate of unemployment.
(a) Using a correctly labeled graph of the long-run aggregate supply curve, short-run
aggregate supply curve, and aggregate demand curve, show each of the following.
(i) Current price level, labeled PL₁, and current output level, labeled Y₁
(ii) The full-employment output level, labeled YF
(b) Assume the country's banking system has ample reserves. What monetary policy
action should the country's central bank use to move the economy toward its long-run
equilibrium?
(c) Draw a correctly labeled graph of the country's reserve market, and show how the
central bank's action to move the economy toward its long-run equilibrium affects the
policy rate in the short run.
(d) Based on the interest rate change from part (c), will each of the following increase,
decrease, or remain the same in the short run?

(d) Based on the interest rate change from part (c), will each of the following increase,
decrease, or remain the same in the short run?
(i) Real output. Explain.
(ii) Natural rate of unemployment
(e) Assume instead that the central bank does not pursue the monetary policy action
from part (b) and there was no other government intervention. Will each of the
following increase, decrease, or remain the same in the long run?
(i) Short-run aggregate supply. Explain.
(ii) Employment

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Step 1: Monetary Policy

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Step 5: Part (d)

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