Why the slope of the aggregate supply curve differs in the short-run and in the long-run? Why the long- run aggregate supply curve is vertical and why the short-run supply curve is upward sloping? Explain in detail.and draw a curve

Q: The short run sequence of events following an unanticipated shift to a more restrictive monetary…

A: A decrease in the money supply or the increment in the short-term interest rates constitutes a…

Q: Suppose the Federal Reserve decreases the money stock. Which of the following statements describes…

A: Monetary contraction means decreasing the money supply in the economy. When the money supply in the…

Q: Given the below charts, the economy is initially at point A on the monetary policy reaction function…

A: The control of the amount of cash available in an economy, as well as the routes through which new…

Q: 4. On March 1, 2020, the federal funds rate was 1.5%. Two weeks later, the federal government shuts…

A: a.   The following are the ways in which fed would face the negative demand shock. These would…

Q: Suppose the economy is in long-run equilibrium, but the central bank decides to increase bank rate…

A: The rise in the bank rate will make lending more expensive for banks, forcing them to charge…

Q: Suppose that there are two simultaneous developments. First, government purchases are reduced.…

A: Monetary policy is the policy being adopted by the monetary authority of a nation for controlling…

Q: Indicate whether the following statement is true, false, or uncertain and explain your answer using…

A: The following problem has been answered as follows:

Q: Describe the Fed’s monetary policy actions over the course of the  2020 year and  identify whether…

A: Considering the impacts of COVID-19 on financial action and on dangers to the viewpoint, the FOMC…

Q: Suppose that the U.S. economy is at full employment when strong economic growth in Asia increases…

A: The US economy is said to be in full employment equilibrium in the initial place. This means that…

Q: Suppose the U.S. economy is initially at long run equilibrium, when there is an unexpected large…

A: When the U.S economy is in long-run equilibrium and the government spending falls unexpectedly, the…

Q: Question 31 The interest-rate effect Answer depends on the idea that increases in interest rates…

A: Interest rate is the percentage of principle charged by the lender for the money that borrows. The…

Q: Suppose the economy is initially at long run equilibrium, when there is an unexpected decrease in…

A: When an economy is in long-run equilibrium and the price of oil falls unexpectedly, the demand for…

Q: The money supply of a country has been growing for many years causing expected inflation of 8% per…

A: Money supply: The money supply is a concept based on macroeconomics which refers to the total amount…

Q: What additional monetary steps has the Federal Reserve undertaken once monetary policy reached the…

A: Federal Reserve undertakes unconventional monetary policies once zero-bound is reached.

Q: Suppose the Federal Reserve decreases the money stock. Create a graph that explains the effect of…

A: Monetary policy is the central bank's policy of money supply and interest rate to influence the…

Q: Which of the following is true of Advantages of the US implicit Nominal Anchor? Select one: a. The…

A: Monetary Policy refers to the decisions taken by the central bank of a country to control the money…

Q: Question 16 Explain why interest rates that consumers and businesses pay must rise, at least in the…

A: Interest rate is considered as the rate at which an individual lends the money to another individual…

Q: In extraordinary policy since the 2008 crisis, what is the role of the Fed's reverse repo operations…

A: The economies around the globe base their decisions, and policies with the motive of enhancing the…

Q: Which of the following best describes the uncertian consequences of the policy that the FED plans to…

A: Answer: There occurs a trade-off between inflation and unemployment in the short-run. If the fed…

Q: For the purpose of this exercise, assume that velocity is stable. If the Fed wants to keep inflation…

A: In economics, inflation refers to an increase in the overall price levels in an economy from one…

Q: Which of the following is not an essential element of inflation​targeting?     A. increased…

A: Monetary policy is the policy regarding money supply in the economy. The monetary policy is operated…

Q: What interest rate essentially serves as the ceiling on how high the federal funds rate can go? What…

A: Banks are required to keep a required amount of reserves with them, known as required reserves. "The…

Q: Explain whether the current policy of the Federal Reserve “expansionary” (accommodative) or…

A: The current policy of the Federal Reserve is expansionary which is also referred to as accommodative…

Q: Since the end of the Great Recession, interest rates have been at historic lows—in some cases, close…

A: The dramatic decrease in economic activity in the late 2000s was known as the Great Recession. One…

Q: Determine whether the following statements are true or false:- a) With the increase of the prices…

A: a) With the increase of price, there will be an increase in demand for money. Hence the real money…

Q: Yf Identify one action the central bank can take to help the economy recover from the recession.…

A: A recession refers to a significant decline in the general level of economic activity being in a…

Q: Assume a country’s economy is currently in recession. Draw a correctly labeled graph of the…

A: When the country is in recession, the overall GDP decreases.

Q: If a recessionary gap occurs in the short run, then in the long run a new equilibrium arises when…

A: Recessionary gap occurs when the short run equilibrium GDP is less than potential level of GDP.…

Q: Suppose the U.S. economy is initially at long run equilibrium, when there is an unexpected economic…

A: Since you have posted a question with multiple parts, we will solve only the first part. To get…

Q: Prior research shows that ___________ of the return in the US markets since 1980 accrues on the…

A: Fed open market committee (FOMC) is the authority that has the right to make an open market purchase…

Q: Monetary policy actions by the Fed are Multiple Choice a. more effective in a restrictive…

A:

Q: Monetary policy and the Phillips curve The following graph shows the current short-run Phillips…

A: The central bank can decrease the money supply in the economy by employing various methods such as…

Q: Suppose a computer virus disables the nation's automatic teller machines, making withdrawals from…

A: The demand for money increases in the economy. This will shift the MD curve rightwards. Also, the…

Q: The banking sector experiencing bank panic when: Select one: a. Many depositors simultaneously…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Given the supply and demand shocks caused by the pandemic, expansionary monetary policy is called…

A: There are a few activities that a national bank can take that are expansionary financial strategies.…

Q: Using the aggregate demand-aggregate supply diagram, graphically illustrate and explain the impact…

A: An expansionary monetary policy increases the money supply in an economy which leads to increase in…

Q: Assume the economy is currently in Recession and the Federal Reserve has chosen to use the required…

A: Given that central bank chooses required reserve policy as a tool, in times of recession, the bank…

Q: suppose the economy suffers an adverse supply shock. if the federal reserve responds by increasing…

A: Aggregate supply represents the total goods and services that producers produce and sell in the…

Q: In country A, all wage contracts are indexed to inflation. That is, each month wages are adjusted…

A: (Q) In country A, all wage contracts are indexed to inflation. That is, each month wages are…

Q: Consider the following simple monetary rules estimated for two different periods, 1969-1985 and…

A: Taylor Rule is defined as a formula which used to predict how the Central Bank would make changes in…

Q: 1) If the money demand function is unstable and undergoes substantial, unpredictable changes, then…

A: Answer - Need to find - statement true, false, or uncertain Given in the question- If the money…

Q: Suppose there is an increase in the oil price in the United States. Which of the monetary policies…

A: Federal reserve is the central bank of United States which is responsible of flow of money into the…