Given the AD-AS model, among the following situations, what is the most challenging for a Central...
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Given the AD-AS model, among the following situations, what is the most challenging for a Central Bank: 1. to use active exogenous monetary policy to offset a financial shock 2. to use active exogenous monetary policy to offset an exogenous increase in prices due to an oil price shock Use the model to discuss each case separately. Can the central bank avoid a drop in output and a variation in the price level? Given the AD-AS model, among the following situations, what is the most challenging for a Central Bank: 1. to use active exogenous monetary policy to offset a financial shock 2. to use active exogenous monetary policy to offset an exogenous increase in prices due to an oil price shock Use the model to discuss each case separately. Can the central bank avoid a drop in output and a variation in the price level?
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