(31 points) Use the DAS-DAD diagrams to graphically illustrate the impact of a permanent increase in the central bank's

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31 Points Use The Das Dad Diagrams To Graphically Illustrate The Impact Of A Permanent Increase In The Central Bank S 1 (33.49 KiB) Viewed 55 times

(31 points) Use the DAS-DAD diagrams to graphically illustrate the impact of a permanent increase in the central bank's inflation target when the economy was initially at a long-run equilibrium. Make sure to draw the curves associated with the initial SR equilibrium and LR equilibrium, the transition from the SR to the LR, and the final LR equilibrium. Clearly label all the curves, axes, equilibrium points, and values of inflation and output. Explain in words the time path of output and inflation.