If Y=C+l+G+NX , C = 100 + 0.8YD , YD=Y-TA , TA = 0.25Y , I=300-20i , G= 120, NX= -20 , M=600 , L=0.5Y-25i a) Find AD function in this economy; b) If the AS curve is Y=30P+385, find the equilibrium output and price; c) If the central bank increases the money supply by 390, find new output and price level; d) if the economy's potential GDP is 685, then what will be the inflation rate in the long-run after the monetary expansion in question c.

If Y=C+l+G+NX , C = 100 + 0.8YD , YD=Y-TA , TA = 0.25Y , I=300-20i , G= 120, NX= -20 , M=600 , L=0.5Y-25i a) Find AD function in this economy; b) If the AS curve is Y=30P+385, find the equilibrium output and price; c) If the central bank increases the money supply by 390, find new output and price level; d) if the economy's potential GDP is 685, then what will be the inflation rate in the long-run after the monetary expansion in question c.

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 5SQ

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