Explain why the short-run aggregate supply curve is upward sloping. Under what circumstances might it be vertical?
Answer to relevant QuestionsAssume the short-run aggregate supply curve can be expressed algebraically asY = 4,800 + 3,000πand the dynamic aggregate demand curve can be written as Y = 5,000 – 1,000π.Find the numerical value for equilibrium output ...Suppose a natural disaster wipes out a significant portion of the economy’s capital stock, reducing the potential level of output. What would you expect to happen to the long-run real interest rate? What impact would ...Are long-term inflation expectations “well anchored?” Using monthly data since 2003, plot a measure of long-term inflation expectations based on the difference between the yields on a five-year Treasury bond (FRED code: ...After examining Figure 22.6, explain the potential link between innovations in financial markets and output volatility since the 1980s. You should consider both the “Great Moderation” and the recession of 2007-2009 in ...*Monetary policymakers observe an increase in output in the economy and believe it is a result of an increase in potential output. If they were correct, what would the appropriate policy response be to maintain the existing ...
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