Refer to the accompanying figure. LRAS Infaton SRAS SRAS AD" AD Output Starting from long-run equilibrium at point C, an adverse inflation shock that increases inflation from n to n' will lead to a short-run equilibrium at point. equilibrium at point and eventually to a long-run ,if left to self-correcting tendencies. Select one: O a. B; A O b. A; B O c. B;C *d. A; C

Refer to the accompanying figure. LRAS Infaton SRAS SRAS AD" AD Output Starting from long-run equilibrium at point C, an adverse inflation shock that increases inflation from n to n' will lead to a short-run equilibrium at point. equilibrium at point and eventually to a long-run ,if left to self-correcting tendencies. Select one: O a. B; A O b. A; B O c. B;C *d. A; C

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter14: Money And The Economy

Section: Chapter Questions

Problem 10QP

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An economy's aggregate demand curve (the relationship between short-run equilibrium output and inflation) is described by the equation:Y = 15,000 - 12,000π, where π is the inflation rate. Initially, the inflation rate is 2 percent or π = 0.02. Potential output Yp equals 14,640.Note: Keep as much precision as possible during your calculations. Your final answer for inflation should be accurate to at least two decimal places and output should be accurate to the nearest whole number.a) Find inflation and output in short-run equilibrium. Inflation : 0%Output : $0 b) Find inflation and output in long-run equilibrium. Inflation : 0%Output : $0
Assume, while an economy is in long-run equilibrium, an adverse supply shock occured, suchas energy prices have incrased. The central bank decides to accommodate this shock and restores theequilibrium quickly. What would be the effect of this policy action on inflation? Explain and illustratewith the help of an AD-AS diagram.
My question is (c). Basically, AS curve becoming steeper can be reflected by the value of v bar increases, showing that inflation is more sensitive to SR AD shock. However, this is no impact on AS shock theoretically, as AS shock relates to the change of o bar. So I guess maybe the provided solution is wrong, could u please check it for me? Thanks a lot!
Suppose the public believes that a newly announcedanti-inflation program will work and so lowers itsexpectations of future inflation. What will happen toaggregate output and the inflation rate in the short run?
Consider the Efficiency Wage story. Suppose we had several periods of 0 inflation. Let ST represent the total supply of labor; SNS the supply of non-shirking (not lazy) workers, and SShrk the number of shirking (lazy) workers. Suppose we had several periods of 0% inflation. Then if we had an increase in Aggregate Demand that caused an increase in the Aggregate Price level, we would see which of the following in the short run? Group of answer choices a) higher inflation and lower unemployment. b) None of the other options. c) lower inflation (which would be deflation given our premise) and higher unemployment. d) higher inflation and higher unemployment. e) lower inflation (which would be deflation given our premise) and lower unemployment.
Asap plz Assuming the economy has a strong-form market and that the current economy has reached its long-term equilibrium with optimal inflation rate π = 3 (%) and the aggregate output y = 10 (£bil). The economy has the following AD-AS curves: I. AD Curve: π = 10-0.7y II. AS Curve: π = 1+0.2y III. LRAS Curve: y = 10 Now, the central bank intends to use monetary policy to boost economic growth and suggest the government to increase £1bil in government expense. You are a researcher and now reviewing effect increased expense. a. What is the short-term equilibrium of π and y? b. What is the long-term equilibrium of π and y? c. What is the new AS curve? Do you think central bank’s suggestion on monetary policy effective?
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Explain whether the followinjl; statements are true,false, or uncertain.a. "Inflation hurts borrowers and helps lenders,because borrowers must pay a higher rate ofinterest.''h. "If prices change in a way that leaves the overallprice level unchanged, then no one is made betteror worse off."r. "Inflation docs not reduce the purchasing powerof most workers."
Goverment should focus on a- long run growth and controling defalation b- lon run growth and controllin inflation c- short run groth and controllin deflation d short run growth and controlling inflation