Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 12, Problem 2RQ
To determine
Sticky inflation assumption and the short-run model.
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Students have asked these similar questions
Describe how changes in expected inflation
impact an economy in the wake of a temporary
negative supply shock.
Consider a standard AD-AS model.
If the central bank responds relatively aggressively to inflation being below target, temporary
supply shocks have relatively little effect on output.
True/False. Remember to include your explanation.
Answer the following using relevant models and / or graphs:
(1) Explain the factors that affect inflation in the short and medium term.
Chapter 12 Solutions
Macroeconomics (Fourth Edition)
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- Which of the following is a policy tool used to combat demand-pull inflation? a) Contractionary fiscal policy b) Expansionary monetary policyarrow_forwardWhen aggregate output is below the natural rate of output, what happens to the inflation rate over time if theaggregate demand curve remains unchanged? Why?arrow_forwardWhat impact will high and variable rates of inflation have on the economy? How will they influence the risk accompanying long-term contracts and related business decisions?arrow_forward
- What is the difference between cost-push inflation and demand-pull inflation? Explain the demand-pull inflationary process.arrow_forwardDetermine the impact of an increase in inflation expectations on output and inflation in the short-run and long-run. (Use AS-AD-LRAS curves to illustrate your reasoning).arrow_forwardCost-push inflation is depicted as a rightward shift of the aggregate demand curve along an upsloping aggregate supply curve. True or False?arrow_forward
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