Poole’s analysis

Dual Mandate: Suppose the central bank has a dual mandate. This implies the following IS-MP-AS model: IS: Y a-b(Re-F) MP: Re-F= m(₁ - 7) + dŸ₁ tt-1+0+0 AS (a) Why does the above model represent a dual mandate? (b) Solve for the AD curve of this economy. (c) Compare the slope of the AD curve in this economy to the slope of an AD curve in an economy with a single mandate (i.e. set d= 0.). Does the slope make sense given the central bank's objectives? Explain using a graph.

In the IS/LM model, if the Keynesian expenditure multiplier is 2.76, the investment sensitivity to interest rates is 10, the income elasticity of money demand is 0.2 and the interest rate elasticity of money demand is 3, then the monetary policy multiplier with respect to income is 3.2 -0.12 0.12 -3.2

oronavirus crisis is an unprecedented shock for the European economy: its effect on economic activity is clearly negative, and the doubts revolve around the magnitude and duration of the impact. In contrast, its effect on inflation raises more questions. There are downward pressures, such as the collapse in consumption due to the lockdown and the fall in the price of oil, but also upward pressures, such as the closure of factories and the general reduction in production. In addition, we must distinguish between the short-term effectsThe rise in inflation in unprocessed food (particularly fruit and vegetables) has been abnormally high, indicating a decline in production and a bottleneck as demand remains more stable, since the lockdown did not alter consumers’ basic needs. Prices may also have been affected by a possible increase in demand as consumers stockpiled. The drop in energy prices, meanwhile, reflects a collapse in demand for energy sources as a result of the shutdown of…

a and b please

I kindly ask to answer the following problem giving the correct solutions

Explain and demonstrate graphically that if the central bank pursues targeting the interest rate, it is likely to lose control over a monetary aggregate. Include correctly labled diagrams.

You work at the Central Bank and you are in charge of forecasting the effects of possible future shocks using the ASAD Redux model. Today, your task is to predict what will happen if the economy is subject to two consecutive shocks, namely, At time t = 1, there is a persistent positive shock on aggregate demand due to increased desired expenditures (e.g., a higher propensity to consume). At time t = 2, the Central Bank implements a permanent reduction in money supply. %3D The Central Bank wants you to forecast what will be the effects of a range of monetary contractions of different magnitude. Hence, you run six numerical simulations of the model assuming different sizes of the reduction in money supply. However, the software is faulty and some simulation results are wrong. Your computer produces six scenarios for employment (N) and price level (P), but some scenarios are clearly incorrect and inconsistent with the general predictions of the theoretical model: you need to eliminate the…

first image is just the resource. second image has the questions 6,7 and 8 * also note This economy’s central bank follows agiven Monetary Policy Rule: r = i = 0.025 × Y + 0.0003 × P , where P is the pricelevel.

Suppose the economy begins at full employment. Label this starting point as point "1." Then, suppose that, due to increased instability in the financial markets, a decrease in investor and consumer confidence occurs. Show the effects on your graph and label the new equilibrium point "2." Lastly, suppose the Federal Reserve wants the economy to return to full-employment as quickly as possible. Should the Fed intervene? If so, show the impact of successful monetary policy on your graph. Label this new equilibrium point "3."