MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
10th Edition
ISBN: 9781319467203
Author: Mankiw
Publisher: MAC HIGHER
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Chapter 16, Problem 1MPA
(a)
To determine
Explain the situation that both inflation rate and natural rate of
(b)
To determine
Solve the inflation rate under discretionary policy.
(c)
To determine
Explain the inflation rate if the natural rate of unemployment rises.
(d)
To determine
Explain the changes in inflation and unemployment.
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Please answer the stuff in the red brackets, I included the information before as context.
For this question, assume that the Fed sets monetary policy according to the Taylor rule. Suppose current U.S. macroeconomic conditions are represented by the following: π < π?* and u > un. Given this information, we would expect that the Fed will:
A.implement a monetary contraction.
B.more information is need to answer this question.
C.maintain its current stance of monetary policy.
D.implement a monetary expansion.
Which of the following would cause an increase in M1?
A.a reduction in the required ratio of reserves to deposits
B.an increase in the discount rate
C.an open market operation where the Fed buys bonds
D.thes
all of these
E.none of these
Time remaining:
00 :09 :06
Economics
If there is an inflationary gap, what should the Fed do? Explain, provide name, and show in i-M space.
Consider the following macroeconomy, with fixed prices (all amounts are in millions of $):
YFE = 7000
C = 40 + 0.9 YD
I = 500
G = 250
T = 40
a. Calculate eqm Y in this model and then graph it in the Keynesian-cross diagram. Indicate and provide the name and size of the gap, if any.
b. Prove that the appropriate relationship between I and various types of Savings holds at eqm.
c. What two different policies could Congress enact? You must calculate the exact changes in the appropriate variables and provide the appropriate name(s) for the(se) policies. Graph each of these policies in the Keynesian-cross diagram. Show what your policies would do, if anything, in the money-market diagram, (in i- M space) cet. par. Indicate the initial disequilibrium and explain what will happen and why.
d. Go back to the original eqm in part a. Now…
Chapter 16 Solutions
MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
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