Monetary Policy Action Question Please use the following data for Macroland to answer the questions. This economy at real full employment output is $70 billion. M = 10 billion %3D V = 10 P = 2 Y = ? billion %3D а. Please solve for Y. (This is the current level of real GDP) b. How much is current level of nominal GDP? с. How big is the gap in real terms? What type of gap is this economy experiencing? d. What type of monetary policy should the FRB adopt to close this gap? How much should the money supply change to close the gap? (other things being equal, hold V and P constant) Construct an idealized money market and show the change in money supply to close the gap. Next, construct an idealized AD/AS model showing the related change to close the gap. е.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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D and E

e.
Create an idealized bond and money market model to show the relationship irot
Describe the outcomes.
Monetary Policy Action Question
Please use the following data for Macroland to answer the questions. This economy at real full employment
output is $70 billion.
M = 10 billion
%3D
V = 10
P = 2
Y = ? billion
%3D
a.
Please solve for Y. (This is the current level of real GDP)
b. How much is current level of nominal GDP?
C.
How big is the gap in real terms? What type of gap is this economy experiencing?
d. What type of monetary policy should the FRB adopt to close this gap? How much should the money
supply change to close the gap? (other things being equal, hold V and P constant)
Construct an idealized money market and show the change in money supply to close the gap. Next,
construct an idealized AD/AS model showing the related change to close the gap.
e.
Transcribed Image Text:e. Create an idealized bond and money market model to show the relationship irot Describe the outcomes. Monetary Policy Action Question Please use the following data for Macroland to answer the questions. This economy at real full employment output is $70 billion. M = 10 billion %3D V = 10 P = 2 Y = ? billion %3D a. Please solve for Y. (This is the current level of real GDP) b. How much is current level of nominal GDP? C. How big is the gap in real terms? What type of gap is this economy experiencing? d. What type of monetary policy should the FRB adopt to close this gap? How much should the money supply change to close the gap? (other things being equal, hold V and P constant) Construct an idealized money market and show the change in money supply to close the gap. Next, construct an idealized AD/AS model showing the related change to close the gap. e.
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