*Consider a previously closed economy that opens up to international trade. Use the aggregate demand-aggregate supply framework to illustrate a situation where this would lead to lower inflation in the long run.
Answer to relevant Questions*In face of global oil price shocks, what could monetary policymakers do to minimize the resulting recessionary gaps? What would be the trade-off of such a policy? Illustrate your answer using the aggregate demand-aggregate ...*How could you use the aggregate demand-aggregate supply (AD/AS) framework to explain the impact of the financial crisis of 2007-2009 on inflation and output in the economy? Explain why monetary policymakers’ actions in cutting the Federal Funds rate to almost zero were not sufficient to boost economic activity during the recession of 2007-2009. Suppose the policy interest rate controlled by the central bank and the inflation rate were both zero. Explain in terms of the aggregate demand-aggregate supply framework how the economy could fall into a deflationary ...In conducting monetary policy, the European Central Bank (ECB) must balance the needs of euro-area countries with differing economic conditions. Plot since 1990 the yield spread between government bonds in Italy (FRED code: ...
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