Under a negative supply shock with a fully credible monetary policy, the AD curve curve in the short run. OA shifts right; does not shift OB. shifts left, shifts up OC. does not shift; shifts down, but by more than under a noncredible monetary policy D. does not shift; shifts up, but by less than under a noncredible monetary policy On the graph to the right, point 3 monetary policy is credible. and the AS represents the short run effect of an aggregate supply shock if Inflation Rate, #₂ #2₂ #₁ LRAS IL 11 AS AS₁ AD₁ Y₂Y₂YD Aggregate Output, Y & O G

Under a negative supply shock with a fully credible monetary policy, the AD curve curve in the short run. OA shifts right; does not shift OB. shifts left, shifts up OC. does not shift; shifts down, but by more than under a noncredible monetary policy D. does not shift; shifts up, but by less than under a noncredible monetary policy On the graph to the right, point 3 monetary policy is credible. and the AS represents the short run effect of an aggregate supply shock if Inflation Rate, #₂ #2₂ #₁ LRAS IL 11 AS AS₁ AD₁ Y₂Y₂YD Aggregate Output, Y & O G

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Can you please just draw the 3 Economic models , the 2 blanchard IS-LM-PC and the Anti Blanchard IS-LM-PC, can you do it for each case , please dont generate AI graphs this is the 5th time i have had to upload this question Assume an economy that starts with Y=Yn .Illustrate graphically and explain the impact of a contractionary monetary policy shock (e.g. a fall in the money supply or a rise in the interest rate) on output, inflation, and the distribution between profits and real wages in each of the following three models: Blanchard IS-LM-PC model with exogenous money; the Blanchard IS-LM-PC model with endogenous money; and the Anti-Blanchard IS-LM-PC model with endogenous money where firms have the power to adjust the economy after a shock.
If the Federal Reserve pursues an expansionary monetary policy, interest rates will ________ and the short-run price level will ________. A decrease; decrease B increase; increase increase; C decrease decrease; D increase increase; remain constant..
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Consider the strength of monetary forces. The effectiveness of monetary policy in bringing about changes in real GDP is enhanced when the OA. investment demand curve and money demand function are both relatively flat. OB. investment demand curve and money demand function are both relatively steep. C. investment demand curve is relatively steep and the money demand function is relatively flat. OD. investment demand curve is relatively flat and the money demand function is relatively steep. OE. None of the above-monetary policy is always equally effective.
Starting at E₁ suppose the Fed uses expansionary monetary policy then LRAS Aggregate price level, P P3 P₂ P₁ E3 E₁ E₂ ****** :AD₁ Yo Y₁ SRAS₂ AD₂ SRAS₁ Real GDP AD₁ will shift to AD2 and the economy will move from E₁ to E2. O SRAS₁ will shift to SRAS2 and the economy will move from E₂ to E3. SRAS₂ will shift to SRAS₁ and the economy will move from E3 to E₂. AD₂ will shift to AD₁ and the economy will move from E₂ to E1.
Exhibit: Monetary Policy and Rational Expectations Price level Pa Pb Pe Pa LRAS 70 AQUDUN CEEKER VANDIERA C a AS b AD₁ YcY₁ Yb ASI AD2 Real GDP per year ม (Exhibit: Monetary Policy and Rational Expectations) Suppose the economy is operating at point a. Some people observe that an expansionary monetary policy will increase the money supply and ultimately drive the price level to the equilibrium at: a. b. They rationally adjust their behavior and the aggregate demand curve shifts to the left and b becomes the new equilibrium point. O b. c. They rationally adjust their behavior and the short-run aggregate supply curve shifts to the left and d becomes the new equilibrium point. O c.d. They rationally adjust their behavior and the aggregate demand curve shifts to the left and d becomes the new equilibrium point. O d.d. They rationally adjust their behavior and the short-run aggregate supply curve shifts to the left and d becomes the new equilibrium point. Save Answer
Which problem should ALWAYS be addressed by the Fed or by the government as a matter of priority when there is a temporary supply shock?Group of answer choices 1It is impossible to know which of the two should be addressed in all cases. 2The output problem. 3The inflation problem. 4The unemployment problem.
ון רבSuip Reset the graph and click on the blue square to apply a negative supply shock the the economy. Then adjust the movable point to view the effects of potential policy responses to the negative supply shock. Use what you observe to answer the questions that follow. a. In response to the effects of a negative supply shock, policymakers decide to decrease aggregate demand. What are the effects of this choice? O an increase in aggregate output, and an increase in the aggregate price level an decrease in aggregate output, and an decrease in the aggregate price level an increase in aggregate output, and an decrease in the aggregate price level an decrease in aggregate output, and an increase in the aggregate price level b. What are the overall tradeoffs with regard to this choice? Policymakers have chosen to fight inflation by increasing AD, but this further reduces aggregate output and makes the recession worse. Policymakers have chosen to fight inflation by decreasing AD, but this…
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tab lock K →1 Question 20 esc Keynesian economists O believe that the classical dichotomy does not hold in the short run O believe that monetary policy affect aggregate output and the real interest rate O observe that prices respond slowly to changes in supply and demand O all of the above Onone of the above A Moving to another question will save this response. Type here to search ? Q 12 S 13 # D $ R % M 5 E D 16. 1 G