1.7 The hypothetical information in the table below shows what the values for real GDP and the price level would have been in 2019 if the Federal Reserve did not use monetary policy: Price Level Year 2018 2019 bills Potential Real GDP $18.5 trillion 19.0 trillion ted to keep real G d them? Real GDP a. Real GDP b. Full-employment real GDP c. The inflation rate d. The unemployment rate $18.5 trillion 19.4 trillion 142 150 its not mat level in 2010 should it have used an b) Suppose the Fed's policy was successful in keeping real GDP at its potential level in 2019. State whether each of the following would be higher or lower than if the Fed had taken no action: c) Draw an aggregate demand and aggregate supply graph to illustrate your answer. Be sure that your graph contains LRAS curves for 2018 and 2019; SRAS curves 2018 and 2019; AD curve for 2018 and 2019, with and without monetary policy actions; and equilibrium real GDP and the price level in 2019 with and without policy.
1.7 The hypothetical information in the table below shows what the values for real GDP and the price level would have been in 2019 if the Federal Reserve did not use monetary policy: Price Level Year 2018 2019 bills Potential Real GDP $18.5 trillion 19.0 trillion ted to keep real G d them? Real GDP a. Real GDP b. Full-employment real GDP c. The inflation rate d. The unemployment rate $18.5 trillion 19.4 trillion 142 150 its not mat level in 2010 should it have used an b) Suppose the Fed's policy was successful in keeping real GDP at its potential level in 2019. State whether each of the following would be higher or lower than if the Fed had taken no action: c) Draw an aggregate demand and aggregate supply graph to illustrate your answer. Be sure that your graph contains LRAS curves for 2018 and 2019; SRAS curves 2018 and 2019; AD curve for 2018 and 2019, with and without monetary policy actions; and equilibrium real GDP and the price level in 2019 with and without policy.
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter14: Modern Macroeconomics And Monetary Policy
Section: Chapter Questions
Problem 10CQ
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1.7 The hypothetical information in the table below shows what the values for real GDP and the
price level would have been in 2019 if the Federal Reserve did not use monetary policy:
Real GDP
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Year
2018
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a. Real GDP
b. Full-employment real GDP
c. The inflation rate
d. The unemployment rate
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b) Suppose the Fed's policy was successful in keeping real GDP at its potential level in
2019. State whether each of the following would be higher or lower than if the Fed had
taken no action:
Potential Real
GDP
$18.5 trillion
19.0 trillion
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c) Draw an aggregate demand and aggregate supply graph to illustrate your answer. Be sure
that your graph contains LRAS curves for 2018 and 2019; SRAS curves 2018 and 2019;
AD curve for 2018 and 2019, with and without monetary policy actions; and equilibrium
real GDP and the price level in 2019 with and without policy.
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$18.5 trillion
19.4 trillion
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level in 2010 should it have used an
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