Just this page. Thank you 8 Macroeconomics LESSON 6 ACTIVITY 42 (contmued)(F) In the short run, what happens to the price level? Explain how the Fed's action results in achange to the price level.Figure 42.3Expansionary Monetary PolicyLRASSRASADY* Y,REAL GDP3. Suppose that in the situation shown in Figure 42.3, the aggregate supply and demand curves arerepresented by LRAS, SRAS and AD. The monetary authorities decide to maintain the level ofemployment represented by the output level Y, by using expansionary monetary policy.(A) Explain the effect of the expansionary monetary policy on the price level and output in theshort run.(B) Explain the effect on the price level and output in the long run.Advanced Placement Economics Macroeconomics: Student Activities O National Council on Economic Education,-------ctriPRICE LEVEL UNIT4 MacroeconomiCS LESSON 6 ACTIVITY 42 (continued)(C) Explain what you think will happen to the nominal rate of interest and the real rate of interestin the short run as the Fed continues to increase the money supply. Explain why.(D) Explain what you think will happen to the nominal rate of interest and the real rate of interestin the long run. Explain why.4. Many economists think that moving from short-run equilibrium to long-run equilibrium maytake several years. List three reasons why the economy might not immediately move to long-runequilibrium.5. In a short paragraph, summarize the long-run impact of an expansionary monetary policy on theeconomy.222Advanced Placamant BanRt

The forces of aggregate demand and aggregate supply determine the macroeconomic equilibrium of an…

Macroeconomics LESSON 6 ACTIVITY 42 (coninued) (F) In the short run, what happens to the price level? Explain how the Fed's action results in a change to the price level. Figure 42.3 Expansionary Monetary Policy LRAS SRAS AD Y* Y, REAL GDP 3. Suppose that in the situation shown in Figure 42.3, the aggregate supply and demand curves are represented by LRAS, SRAS and AD. The monetary authorities decide to maintain the level of employment represented by the output level Y, by using expansionary monetary policy. (A) Explain the effect of the expansionary monetary policy on the price level and output in the short run. (B) Explain the effect on the price level and output in the long run. PRICE LEVEL

Macroeconomics LESSON 6 ACTIVITY 42 (coninued) (F) In the short run, what happens to the price level? Explain how the Fed's action results in a change to the price level. Figure 42.3 Expansionary Monetary Policy LRAS SRAS AD Y* Y, REAL GDP 3. Suppose that in the situation shown in Figure 42.3, the aggregate supply and demand curves are represented by LRAS, SRAS and AD. The monetary authorities decide to maintain the level of employment represented by the output level Y, by using expansionary monetary policy. (A) Explain the effect of the expansionary monetary policy on the price level and output in the short run. (B) Explain the effect on the price level and output in the long run. PRICE LEVEL

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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