Assume That A Country S Economy Is In A Short Run Equilibrium And The Actual Unemployment Rate Is Lower Than The Natural 1 (51.87 KiB) Viewed 49 times
Assume That A Country S Economy Is In A Short Run Equilibrium And The Actual Unemployment Rate Is Lower Than The Natural 2 (51.87 KiB) Viewed 49 times
Assume that a country's economy is in a short-run equilibrium and the actual unemployment rate is lower than the natural rate of unemployment. a) Using a correctly labeled graph of the long-run aggregate supply curve, short-run aggregate supply curve, and aggregate demand curve, show each of the following i) Current price level, labeled PL1, and current output level, labeled Y1 ii) The full-employment output level, labeled YF. b) Which fiscal policy should the government use in order to move the economy toward equilibrium? c) Which open market operation should the Fed use in order to move the economy toward equilibrium? d) Using the determinants of Aggregate Demand: i) Describe an action that will move the economy toward equilibrium and close the output gap. ii) Graph the action you just described. e) Show the effect of your answer in Part d on a Phillips Curve.
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