3.1 Illustrate cach of the following situations with a graph showing AS and AD curves, and explain what happens to the equilibrium values of the price level and aggregate output: a. A decrease in G with the money supply held constant by the Fed b. A decrease in the price of oil with no change in government spending c. An increase in Z with no change in government spending d. An increase in the price of oil and a decrease in G
3.1 Illustrate cach of the following situations with a graph showing AS and AD curves, and explain what happens to the equilibrium values of the price level and aggregate output: a. A decrease in G with the money supply held constant by the Fed b. A decrease in the price of oil with no change in government spending c. An increase in Z with no change in government spending d. An increase in the price of oil and a decrease in G
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Six Debates Over Macroeconomic Policy
Section: Chapter Questions
Problem 2CQQ
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Z in the rule stands for all the factors that affect the Fed’s interest rate decision except for Y and P. Since we have taken G to be positive, the factors in Z are defined to be such that a high value of a factor makes the Fed inclined to have a high interest-rate value, other things being equal.
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