a) Consider an AD-AS model with Static Expectations. Show how changes in monetary policy generate short-run movements in output.

Economics: Private and Public Choice (MindTap Course List)
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Chapter15: Macroeconomic Policy, Economic Stability, And The Federal Debt
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a) Consider an AD-AS model with Static Expectations. Show how changes in monetary policy generate short-run movements in output.

(b) Consider an AD-AS model with Rational Expectations. Show how changes in the unanticipated component of monetary policy generate short-run movements in output.

(c) Explain how overlapping wage contracts generate persistence in output when there are monetary policy shocks.

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