6. Monetary policy and the problem of inflationary and recessionary gaps On the following graph, the economy is producing at point A (grey star symbol), which corresponds to the intersection of the AD, and SRAS, curves. The Federal Reserve ("the Fed") is considering whether to intervene in an effort to bring the economy back to its potential. Plot the "No Intervention" and "If Fed Intervenes" on the? 180 175 LRAS graph SRAS₂ This is how the "No Intervention" would like on the graph PRICE LEVEL 170- 165 160 No Intervention SRAS₁ A 155 AD₁ 150 AD2 145 140 9 10 11 12 13 14 15 16 17 REAL GDP (Trillions of dollars) ++ If Fed Intervenes This is how the "If Fed Intervenes" would like on the graph In this economy, the Natural Real GDP is $9 trillion, 11 trillion, $13 trillion, $10 trillion, $15 trillion a recessionary gap or Since Real GDP is currently $15 trillion (as shown by point A), this level of output means there is currently an inflationary gap of $1 trillion, $2 trillion, $4 trillion, $5 trillion, $3 trillion On the previous graph, place the tan point (dash symbol) at the new long-run equilibrium output and price level if the Fed does not intervene. (Assume there are no feedback effects on the curve that does not shift.) Now suppose the Fed chooses to intervene in an effort to move the economy more quickly back to its potential output. To do so, the Fed will increase or decrease the money supply, which will the interest rate, thereby giving firms an incentive to increase or decrease investment, shifting increase or decrease the curve to the SRAS, AD, or right or left LRAS On the previous graph, place the black point (plus symbol) at the new long-run equilibrium output and price level if the Fed intervenes in this way and successfully brings the economy back to long-run equilibrium. (Again, assume there are no feedback effects on the curve that does not shift.) Compare your answers from the previous few questions. If the Fed does not intervene, the economy will likely have relatively high unemployment or inflation . supply too much. On the other hand, if the Fed does intervene, it risks causing relatively high unemploymen or, if it changes the money inflation

If “inflation is always and everywhere a monetary phenomenon,” why did the huge expansions of central bank money by the Federal Reserve, the ECB, and the Bank of Japan between 2007 and 2018 not result in high inflation in those economies? The previously answered questions have a range of 2007-2015. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

In order to manipulate the inflation rate in the United States, the Federal Reserve lowers the federal funds rate. What will occur as a result? Select all that apply.

Since the committee's meeting labor market conditions deteriorated and the available data indicate that consumer spending, business investment and industrial production have declined. Finiacial markets remain quite strained and credit conditions tight.  identify the policy action is fiscal or monetary identify the policy is expansionary or contraction art