2. The graph below shows the AD-AS model in short-run equilibrium at a price level, Po, and a level of real GDP, Yo. Label the following: both axes, AD, SRAS, LRAS, Po, Yo, and YP. A. Is this SR equilibrium a recessionary gap or an inflationary gap? B. Assume the Fed decides to act. How would you suggest they use or alter each of the following? - Open Mkt Operations - Required Reserve Ratio - Discount/Federal Funds Rates
2. The graph below shows the AD-AS model in short-run equilibrium at a price level, Po, and a level of real GDP, Yo. Label the following: both axes, AD, SRAS, LRAS, Po, Yo, and YP. A. Is this SR equilibrium a recessionary gap or an inflationary gap? B. Assume the Fed decides to act. How would you suggest they use or alter each of the following? - Open Mkt Operations - Required Reserve Ratio - Discount/Federal Funds Rates
Chapter26: Monetary Policy
Section26.A: Policy Disputes Using The Self Correcting Aggregate Demand And Supply Model
Problem 1SQP
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