Assume the central bank increases the quantity of money by 25%, even though the economy is and long-run macroeconomic equilibrium. Describe the effects, in the short run and in the long run, on the following a. Aggregate output b. The aggregate price level The real value of the money supply C. d. The interest rate

Japan's money supply is growing rapidly at a 5.54% while real GDP is increasing at 8.29%.  Japan's real interest rate is also growing at 4.46%.  *we are assuming Quantity Theory of Money, Classical Dihotomy, and Fisher Effect effect are true. a. calculate the inflation rate  b. calculate nominal interest rate  c. calculate GDP growth rate

Read the news clip, then answer the following questions. inflation when it discusses The news clip refers to rising production costs. "Rising labour productivity" can neutralize the effect on the inflation rate of "higher input costs" because A. cost-push; it increases short-run aggregate supply and long-run aggregate supply with no slowdown in aggregate demand growth OB. demand-pull; it increases aggregate demand OC. demand-pull; it increases short-run aggregate supply D. cost-push; it increases aggregate demand by more than it increases short-run aggregate supply Tight Money Won't Slay Food, Energy Inflation It's important to differentiate between a general increase in prices a situation in which aggregate demand exceeds their aggregate supply and a relative price shock. For example, a specific shock to energy prices can become generalized if producers are able to pass on the higher costs. So far, global competition has made that difficult for companies, while higher input costs have…

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