Start with AS/AD and IS/MP in full employment equilibrium. Assume the is a massive positive aggregate demand shock. How would this affect AS/AD and IS/MP and prices and output relative to the full employment level the models started at. With the help of the Phillips curve describe what happens to prices and unemployment. What kind of policy would the FED have to undertake to move the economy back to the full employment level of output. Describe what this monetary policy would do to output, prices and interest rates, and to employment and prices on the Phillips Curve.
Start with AS/AD and IS/MP in full employment equilibrium. Assume the is a massive positive aggregate demand shock. How would this affect AS/AD and IS/MP and prices and output relative to the full employment level the models started at. With the help of the Phillips curve describe what happens to prices and unemployment. What kind of policy would the FED have to undertake to move the economy back to the full employment level of output. Describe what this monetary policy would do to output, prices and interest rates, and to employment and prices on the Phillips Curve.
Chapter27: The Philips Curve And Expetactions Theory
Section: Chapter Questions
Problem 5SQP
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Start with AS/AD and IS/MP in full employment equilibrium. Assume the is a massive positive aggregate demand shock. How would this affect AS/AD and IS/MP and prices and output relative to the full employment level the models started at. With the help of the Phillips curve describe what happens to prices and unemployment . What kind of policy would the FED have to undertake to move the economy back to the full employment level of output. Describe what this monetary policy would do to output, prices and interest rates, and to employment and prices on the Phillips Curve.
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