Suppose the monetary policy curve is given by r = 1.5 + 0.75m, and the IS curve is given by Y = 13 -r. a) Find the expression for the aggregate demand curve. b) Calculate aggregate output when the inflation rate is 2%, 3% and 4%. c) Plot the aggregate demand curve and identify the three points from part (Ъ). d) What would be the effect on the aggregate demand curve of an increase in net export? Would an increase in net exports affect the monetary policy curve? Explain why or why not.

Suppose the monetary policy curve is given by r = 1.5 + 0.75m, and the IS curve is given by Y = 13 -r. a) Find the expression for the aggregate demand curve. b) Calculate aggregate output when the inflation rate is 2%, 3% and 4%. c) Plot the aggregate demand curve and identify the three points from part (Ъ). d) What would be the effect on the aggregate demand curve of an increase in net export? Would an increase in net exports affect the monetary policy curve? Explain why or why not.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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