Suppose the monetary policy curve is given by r = 1.5 + 0.751(, and the IS curve
Question:
Suppose the monetary policy curve is given by r = 1.5 + 0.751(, and the IS curve is given by Y = 13 - r.
a. Calculate an expression for the aggregate demand curve.
b. Calculate the real interest rate and aggregate output when the inflation rate is 2%, 3%, and 4%.
c. Draw graphs of the IS, MP, and AD curves, labeling the points from part (b) on the appropriate graphs.
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a We can find an expression for the AD curve by substituting the MP c...View the full answer
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Related Book For
The Economics of Money Banking and Financial Markets
ISBN: 978-0133836790
11th edition
Authors: Frederic S. Mishkin
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