Suppose pessimism about the future makes household consumption plummet. How would this affect the AD-AS model in the short-run, and what monetary policy could be implemented to stabilize this fluctuation? Illistrate on a diagram if possible.

Elaborate on the impact of a central bank's reduction in interest rates using the AD-AS model.

Inflation in Theoretica(pretend country) is currently below the target range of its central bank. What does this tell you regarding Theoretica’s likely output gap? Illustrate it using an AS-AD diagram, and briefly explain your diagram

The Reserve Bank of Australia would like to decrease the interest rates in the economy. What open market operation (OMO) action should the central bank take? Explain in detail the OMO process and its implications for the cash rate, interest rates, inflation and GDP. Draw by hand the effect of the OMO process using the MD-MS diagram.

Suppose that a given economy, in which the level of production (Y) is not at the natural level (Yn), an economy in which Y#Yn. 1) Using the AS/AD model, give an explanation of what will happen in the future and suggest a fiscal and/or a monetary policy to adjust the output and further analyse the effect of the suggested policy on employment and price level. 2) Illustrate your answer in part 1) by presenting and analysing data from the UK by identifying two occasions since 1950 (each covering a span of 2-5 years), where such an adjustment process occurred.

Assume you are a member of the Federal Reserve, and you are adhering to the dual mandate. The economy reflects the following:  2018 CPI: 115  2019 CPI: 121.9  Potential GDP: $20 trillion  2019 Real GDP: $21 trillion  Natural rate of unemployment: 4.00%  2019 unemployment rate: 3.50%  Sketch a graph of the AD-AS Model. Be Sure to label all parts of the graph. Notate what type of gap you have and be sure to reflect it in your graph.  What monetary policy tools can be used to fix the gap identified in part A?  Assume you have adopted the Taylor Rule. Calculate the targeted federal funds rate if the equilibrium real federal funds rate and target rate of inflation is both 2%.  Graphical demonstrate the effects your recommended change of the Federal Funds Rate has on the reserves market, the money market, and the loanable funds market. Note that you should have three separate graphs, one for each market, but you do not have to worry about finding the quantity of reserves, money, or…

Using the Equation of Exchange, argue how increasing government spending can help the economy/aggregate demand.

We often use the SRAS/AD model to describe which of the following?     short run economic fluctuations     long run economic trends     the effect of changes in the money supply on the interest rate     the trade balance

What would be the impact of an appreciating currency on aggregate demand? a) Decrease b) Increase

How does an expansion of the money supply affect the aggregate-demand curve? How does your answer differ if we consider a closed economy versus an open economy?