The economy of Carlsberg is presently in equilibrium, but is suffering a recession as depicted in the graph below. The central bank of Carlsberg is introducing an expansionary monetary policy to get the economy back to the full-employment level of real GDP. Price index 180 160 140 120 100 80 (440, 80) 60 420 430 440 450 460 470 480 490 500 Real GDP (in billions) LAS a. What increase in aggregate demand is necessary to achieve this? billions. b. If successful, what will be the growth rate? Round your answer below to 2 decimal places. c. If successful, what will be the inflation rate? Round your answer below to 2 decimal places. 1%

The economy of Carlsberg is presently in equilibrium, but is suffering a recession as depicted in the graph below. The central bank of Carlsberg is introducing an expansionary monetary policy to get the economy back to the full-employment level of real GDP. Price index 180 160 140 120 100 80 (440, 80) 60 420 430 440 450 460 470 480 490 500 Real GDP (in billions) LAS a. What increase in aggregate demand is necessary to achieve this? billions. b. If successful, what will be the growth rate? Round your answer below to 2 decimal places. c. If successful, what will be the inflation rate? Round your answer below to 2 decimal places. 1%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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