You have data for real output y, price level P, and the nominal wage W at two distant dates (time t = 0 and time t = 10) for three different economies: United Kingdom Date Price level t = 0 t = 10 Output y = 200 y = 190 P = 10 P = 10 Wage W = 50 W = 40 France Output y = 250 y = 250 Price level P = 15 P = 15 Wage W = 45 W = 45 Date t = 0 t = 10 Germany Date Output y = 220 y = 240 Price level t = 0 t = 10 P = 12 P = 12 Wage W = 40 W = 35 All these observations reflect potential equilibrium levels: each of the three economies was in a first potential equilibrium at time t= 0 and and is in a new potential equilibrium at time t = 10. You do not have any short-run data. wwww (3.B) Between time t= 0 and time t = 10, one of the three economies experienced a shock on productivity and a monetary intervention (a change in money supply). Can you identify this economy? Motivate your answer and try to speculate on a plausible reason for the monetary intervention.

You have data for real output y, price level P, and the nominal wage W at two distant dates (time t = 0 and time t = 10) for three different economies: United Kingdom Date Price level t = 0 t = 10 Output y = 200 y = 190 P = 10 P = 10 Wage W = 50 W = 40 France Output y = 250 y = 250 Price level P = 15 P = 15 Wage W = 45 W = 45 Date t = 0 t = 10 Germany Date Output y = 220 y = 240 Price level t = 0 t = 10 P = 12 P = 12 Wage W = 40 W = 35 All these observations reflect potential equilibrium levels: each of the three economies was in a first potential equilibrium at time t= 0 and and is in a new potential equilibrium at time t = 10. You do not have any short-run data. wwww (3.B) Between time t= 0 and time t = 10, one of the three economies experienced a shock on productivity and a monetary intervention (a change in money supply). Can you identify this economy? Motivate your answer and try to speculate on a plausible reason for the monetary intervention.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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