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- In an OLG model with money: Each gen picks 12 bananas when young, 0 bananas when old. Central bank prints out 2 units of money, given to gen 0 for free. The price level of this economy is 1 bananas = ______ money.How would you define sticky pricesUsing graph and words, explain the Ricardo-Barro effect.
- What role does the government, both the fscal authority and themonetary authority, play in recessions and booms and in determining therate of infation?Now suppose that droughts in the Southeast and floods in the Midwest substan-tially reduce food production in the United States. Suppose you are an economistworking for the Federal Reserve.d. Use the aggregate demand–aggregate supply model to illustrate graphically the im-pact in the short run and the long run of this adverse supply shock. Be sure to label:i. the axes; ii. the curves; iii. the initial equilibrium values; iv. the direction the curvesshift; v. the short-run equilibrium values; and vi. the long-run equilibrium values.State in words what happens to prices and output in the short run and the long run.e. Use the aggregate demand–aggregate supply model to illustrate graphically your pol-icy recommendation to accommodate this adverse supply shock, assuming that yourtop priority is maintaining full employment in the economy.f. Would you recommend the same policy if your top priority was maintaining the pricestability? Why?The Covid19 crisis and lockdown has been a supply response, the government Use the ADAS model, in conjunction with the IS of the shock and policy response.offered a R500bn stimulus package side shock to the South African economy. In to help cushion the blow.LMBP, to explain the supply and demand dynamics Where will equilibrium income and prices settle? Draw the graphs and explain the complete chain reaction
- Define the term Switching Policy?In an OLG model with money: Each gen picks 12 banans when young, 0 bananas when old. Central bank prints out 2 units of money, given to gen 0 for free. The price level of this economy is 1 bananas = ______ money.What is the Leontief Paradox? How does it occur? Analyze all the competing explanations for the Paradox! What is its significance for the H-O theory, and for economic policymakers?
- Consider the following demand-and-supply model for money:Money demand: Md = β0 + β1Yt + β2Rt + β3Pt + u1tMoney supply: Ms= α0 + α1Yt + u2t Assume that R and P are exogenous and M and Y are endogenous. a. Is the demand function identified?b. Is the supply function identified?I'm currently taking Macroeconomic course and I wanna ask what is the menu costs and Is it somehow relate with the assumption of monetary neutrality? Thank youDescribe the difference betweenan exogenous and an endogenous theory about the money supply.In your view what importantdifferences between the twotheories exist?