Explain why monetary policy makers cannot restore the original long-run equilibrium of the economy if, in the short run, the economy has moved to a point where inflation is above target inflation and output is below potential output.
Answer to relevant QuestionsList the financial transactions you have engaged in over the past week. Howmight each one have been carried out 50 years ago? Will changes in technology affect the rate at which the short-run aggregate supply curve shifts in response to an output gap? Why or why not? Provide some specific examples of how technology will change the rate of ...To keep inflation low and steady, central banks would like to keep output reasonably close to its potential level, but can they anticipate changes in potential GDP? Plot since 1960 the percent change from a year ago of the ...Many economists have argued that Japan’s economic problems during the 1990s were caused largely by bank failures and the failure of the Japanese government to clean up the banking system. Explain how a collapse of the ...Why might the zero nominal-interest-rate bound lead policymakers to raise their inflation objective?
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