Identifying if an economy is in medium run equilibrium and the necessary central bank action to retum the economy to medium run equilibrium. Here are values for a hypothetical economy: Yn = 1000 u, = 5% n = 2% x= 1% =2% and a table describing this economy in various situations: Situation Yn Y C G |(%) A(%) U(%) x(%) 1000 1000 700 150 150 4 5 B 1000 1050 730 170 150 2 3 C 1000 950 670 130 150 4 1 3. D 1000 950 670 150 130 4. 1 1. 1000 1050 730 150 170 4. 1. Explain why Situation A is a full medium run equilibrium and Situation B, C, D and E are not a full medium run equilibrium. O A. In situation A, output is at potential and unemployment is at its natural rate. In all other situations, this is not true. O B. In situation A, output is at potential and unemployment is at its natural rate. In all other situations, the economies are in long-run equilibrium. OC. Situation A, where output is at potential and unemployment is at its natural rate, represents a long-run equilibrium. In all other situations, the economies are in a medium-run equilibrium.

Identifying if an economy is in medium run equilibrium and the necessary central bank action to retum the economy to medium run equilibrium. Here are values for a hypothetical economy: Yn = 1000 u, = 5% n = 2% x= 1% =2% and a table describing this economy in various situations: Situation Yn Y C G |(%) A(%) U(%) x(%) 1000 1000 700 150 150 4 5 B 1000 1050 730 170 150 2 3 C 1000 950 670 130 150 4 1 3. D 1000 950 670 150 130 4. 1 1. 1000 1050 730 150 170 4. 1. Explain why Situation A is a full medium run equilibrium and Situation B, C, D and E are not a full medium run equilibrium. O A. In situation A, output is at potential and unemployment is at its natural rate. In all other situations, this is not true. O B. In situation A, output is at potential and unemployment is at its natural rate. In all other situations, the economies are in long-run equilibrium. OC. Situation A, where output is at potential and unemployment is at its natural rate, represents a long-run equilibrium. In all other situations, the economies are in a medium-run equilibrium.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter20: Monetary Policy

Section20.A: Policy Disputes Using The Self Correcting Aggregate Demand And Supply Model

Problem 6SQ

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