ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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suppose the economy is at its long-run equilibrium when there is a sudden tightening of
compare the following variables to their initial long-run equilibrium.
What happens to long-run real interest rates and long-run inflation. Do they go up-down, stay the same? and please explain why??
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- If the Federal Reserve pursues an expansionary monetary policy, interest rates will ________ and the short-run price level will ________. A decrease; decrease B increase; increase increase; C decrease decrease; D increase increase; remain constant..arrow_forwarda. According to the Misperceptions theory, what would be the effect of an unanticipated monetary expansion shock on real interest rate (r), real output (Y), and price level (P) in the short and in the long-run? Why? Explain with details.b. Does your answer change if the shock is expected/anticipated? Why? Show how.arrow_forwardPlease be sure to explain why and how to the questions -Thank youarrow_forward
- a. Inflation in Theoretica is currently below the target range of its central bank. What does this tell you regarding Theoretica's likely output gap?arrow_forwardTightening monetary policy causes interest rates to O none of the other answers are correct. O fall; demand; increase O fall; supply; increase O rise; supply; decrease Orise; demand; decrease and aggregate toarrow_forwardWhy might Keynesians be pessimistic about the ability of monetary policy to stimulate output in situations such as the 1930s Depression in the United States or the recessions in Japon in the 1990s? What type of policy would Keynesian economists expect to be effective in such situations?Explain by diagrams.arrow_forward
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