The long-run effects of monetary policy INFLATION RATE02468UNEMPLOYMENT RATE (Percent)SRPC10Which of the following statements are true based on these graphs? Check all that apply.The long-run effect of the central bank's policy isandin real GDP.A12The unemployment rate is currently 6% higher than the natural rate of unemployment.The natural level of output is $9 trillion.The current quantity of output is greater than potential output.Suppose the central bank of the economy increases the money supply.LRPCShow the long-run effects of this policy on both of the graphs by shifting the appropriate curves.iMessagein the inflation rate,MacBook Airin the unemployment rate,A-2SA+ The following graphs show the state of an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) andlong-run aggregate supply (LRAS) curves. The second shows the long-run and short-run Phillips curves (LRPC and SRPC).PRICE LEVEL3LRAS6912OUTPUT (Trillions of dollars)AiMessage15AD18OADLRASMacBook Air(?

Aggregate Demand (AD): Aggregate interest is the amount of labor and products that families, firms,…

INFLATION RATE 2 4 6 8 UNEMPLOYMENT RATE (Percent) SRPC 10 The long-run effect of the central bank's policy is and in real GDP. 12 Which of the following statements are true based on these graphs? Check all that apply. The unemployment rate is currently 6% higher than the natural rate of unemployment. The natural level of output is $9 trillion. The current quantity of output is greater than potential output. Suppose the central bank of the economy increases the money supply. iMessage LRPC Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves. in the inflation rate, MacBook Air in the unemployment rate, A-2 2 A. O

INFLATION RATE 2 4 6 8 UNEMPLOYMENT RATE (Percent) SRPC 10 The long-run effect of the central bank's policy is and in real GDP. 12 Which of the following statements are true based on these graphs? Check all that apply. The unemployment rate is currently 6% higher than the natural rate of unemployment. The natural level of output is $9 trillion. The current quantity of output is greater than potential output. Suppose the central bank of the economy increases the money supply. iMessage LRPC Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves. in the inflation rate, MacBook Air in the unemployment rate, A-2 2 A. O

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The monetary policy has two basic goals: to promote “maximum” sustainable output and employment and to promote “stable” prices (Federal Reserve Bank of San Franciso). Making these two goals possible is based off of more than just monetary. Technology is now included because technology can replace employment. If people decide to save, it can affect both employment and the goods that can be reduced. There are many other things that can affect the maximizing of sustainable output. The cause-effect chain through is that policy can have an effect on banks and money supply. The monetary policy also has an effect the way consumers spending and the interest rates that are given by banks. It can also affect the way people invest. The major strengths of monetary policy is that it stable prices. When inflation rises faster than expected, the Fed may sell government bonds to take money out of circulation or raise short-term interest rates (Federal Reserve Bank of San…
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