MindTap Economics, 1 term (6 months) Printed Access Card for Mankiw's Principles of Macroeconomics, 8th (MindTap Course List)
8th Edition
ISBN: 9781337096591
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 21, Problem 5PA
(a):
To determine
Graphical illustration of demand and supply model when the economy is in recession.
(b):
To determine
Identify an open market operation that would restore the economy to its natural rate.
(c):
To determine
Graphical illustration of
(d):
To determine
Draw a graph which shows the effect of open market operation.
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Students have asked these similar questions
The economy is in a recession with high unemployment and low output.
a)Draw a graph of aggregate demand and aggregate supply to illustrate the current situation. Be sure to include the aggregate-demand curve ,the short-run aggregate-supply curve ,and the long-run aggregate-supply curve.
b) Identify an open-market operation that would restore the economy to its nature rate.
c)Draw a graph of the money market to illustrate the effect of this open-market operation.Show the resulting change in the interest rate.
d) Draw a graph similar to the one in part a to show the effect of the open-market operation on output and the price level.Explain in words why the policy has the effect that you have shown in the graph.
“Monetary policy is the macroeconomic policy laid down by the central bank of an economy.”In terms of the above statement, explain how monetary policy can be used to combat inflation
The graph below shows the long-run aggregate supply
(LRAS), the short-run aggregate supply (SRAS), and
aggregate demand (AD) curves for a given economy.
LRAS
10
Manipulate the curves to show the long run effect of an
increase in money supply.
9.
SRAS
8.
In the long run, an increase in the money supply will result
in the following.
6.
Real GDP:
3
AD
1
0.
01
1
4
6.
8.
6.
10
Real GDP
The aggregate price level
decreases
stays the same
increases
2.
7,
5.
Aggregate price level
Chapter 21 Solutions
MindTap Economics, 1 term (6 months) Printed Access Card for Mankiw's Principles of Macroeconomics, 8th (MindTap Course List)
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