How often is negative supply shocks associated with recessions? Plot on a quarterly basis since 1971 the real price of oil measured as the ratio of the nominal price of oil (FRED code: OILPRICE) to the U.S. Consumer Price Index (CPIAUCSL). Identify recessions that may have been triggered in part by an oil price shock.
Answer to relevant QuestionsDefine the term stabilization policy and describe how it can be used to reduce the volatility of economic growth and inflation. Do stabilization policies improve everyone's welfare? The economy has been sluggish, so in an effort to increase output in the short run, government officials have decided to cut taxes. They are considering two possible tax cuts of equal size in terms of lost revenue. The first ...*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 ...Display as a bar chart the periods since 1854 that are designated as U.S. recessions by the National Bureau of Economic Research (FRED code: USREC). Why has the frequency of recessions declined over time? Could improvements ...Describe the theory of the exchange-rate channel of the monetary transmission mechanism. How, through the exchange rate, does an interest rate increase influence output? Why is this link difficult to find in practice?
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