Question: I was hoping to get some help with this problem. Thanks in advance! 2. Consider the standard classical model with the following specifications: . NS

I was hoping to get some help with this problem. Thanks in advance!

2. Consider the standard classical model with the following specifications: . NS = [WI . Cobb-Douglas Production Function . Quantitative Theory of Money holds and adequately describes aggregate demand . [7, a, A, K, M, V] = [2, 0.5, 25, 4, 100, 1] Define Tt+1 to be the inflation rate between time t and t + 1. Suppose between t and t + 1 A falls to 16 due sudden oil shortages. Find inflation Tt+1. A. Tt+1 = 25% B. Tt+1 = 50% C. Tt+1 = 85% D. Tt+1 = 95%

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