Question: = = Y- Problem 3. The economy is described by C 10+ 0.8YD, I = 45 100r, G = 30, and T = 30. The

= = Y- Problem 3. The economy is described by C

= = Y- Problem 3. The economy is described by C 10+ 0.8YD, I = 45 100r, G = 30, and T = 30. The interest rate rule is r = 0.01 +4( 0.02) +3143300). Currently, the inflation rate is a = 2%. Expected inflation always coincides with the actual inflation rate. (A) Find the initial short-run equilibrium. Show it on an IS/MP diagram. (B) Due to supply chain disruptions, inflation went up to 5%. Expected inflation went up by the same amount, too. Find the new equilibrium and show it on IS/MP. = = Y- Problem 3. The economy is described by C 10+ 0.8YD, I = 45 100r, G = 30, and T = 30. The interest rate rule is r = 0.01 +4( 0.02) +3143300). Currently, the inflation rate is a = 2%. Expected inflation always coincides with the actual inflation rate. (A) Find the initial short-run equilibrium. Show it on an IS/MP diagram. (B) Due to supply chain disruptions, inflation went up to 5%. Expected inflation went up by the same amount, too. Find the new equilibrium and show it on IS/MP

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