Graphically depict the U.S. economy in long-run equilibrium. Label each of the curves (AD, SRAS, LRAS,...
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Graphically depict the U.S. economy in long-run equilibrium. Label each of the curves (AD, SRAS, LRAS, MS, MD), and the equilibrium price level, PA, output, YA, quantity of money in the public's hands, M4, and the corresponding purchasing power of money. b. (2 points) Say the Federal Reserve increases the discount rate and the interest on excess reserves. Graphically depict what happens in the economy using the same graphs as part (a). Clearly label each of the following (if applicable): the initial long-run equilibrium, A i. ii. iii. iv. V. vi. vii. viii. the new curves AD new, SRASnew, LRAS new, Mnew, Mnew the short-run equilibrium, B the short-run equilibrium price level, PB the short-run equilibrium level of output, YB the new long-run equilibrium, C the new long-run equilibrium price level, Pc, and purchasing power of money the new long-run equilibrium level of output, YC ix. the new long-run equilibrium quantity of money in the public's hands, Mc c. (0.60 points) What happens to the overall price level, output, and unemployment during the short-run fluctuation in output? d. (0.40 points) What part of a business cycle does the fluctuation from equilibrium A to B reflect? Graphically depict the U.S. economy in long-run equilibrium. Label each of the curves (AD, SRAS, LRAS, MS, MD), and the equilibrium price level, PA, output, YA, quantity of money in the public's hands, M4, and the corresponding purchasing power of money. b. (2 points) Say the Federal Reserve increases the discount rate and the interest on excess reserves. Graphically depict what happens in the economy using the same graphs as part (a). Clearly label each of the following (if applicable): the initial long-run equilibrium, A i. ii. iii. iv. V. vi. vii. viii. the new curves AD new, SRASnew, LRAS new, Mnew, Mnew the short-run equilibrium, B the short-run equilibrium price level, PB the short-run equilibrium level of output, YB the new long-run equilibrium, C the new long-run equilibrium price level, Pc, and purchasing power of money the new long-run equilibrium level of output, YC ix. the new long-run equilibrium quantity of money in the public's hands, Mc c. (0.60 points) What happens to the overall price level, output, and unemployment during the short-run fluctuation in output? d. (0.40 points) What part of a business cycle does the fluctuation from equilibrium A to B reflect?
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a The required graphs are drawn in figure 1 The initial longrun equilibrium is at point A The price ... View the full answer
Related Book For
Macroeconomics Principles, Applications, and Tools
ISBN: 978-0132555234
7th Edition
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
Posted Date:
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