Assume that wages and prices are sticky

Assignment Help Business Economics

Reference no: EM131173424

Assume that wages and prices are sticky and that we start at a long run equilibrium. Assume that at this initial point, the growth rate of the money supply is 6%, the growth rate of the velocity of money is 5% and that the real economic growth rate is 4%. Assume that there is a drop in consumption and investment such that causes total spending growth to drop by 5%. Assume now that the Federal Reserve is going to try and counter this drop in consumption and investment through monetary policy, and that they increase the growth rate of the money supply by 9%.

What is the value of expected inflation for the SRAS curve before the Federal Reserve increases the growth rate of the money supply? Hint: enter your answer without a % sign

After consumption and investment fall (and before Federal Reserve action), what is the inflation rate in your graph?

After Federal Reserve action, what is the growth rate of the velocity of money? Hint: enter your answer without a % sign

After Federal Reserve action, what is the real economic growth rate in your graph?Hint: enter your answer without a % sign

Reference no: EM131173424

Questions Cloud

Describe what hacking of memory or hacking of ram means : Describe what hacking of memory or hacking of RAM means. Examine the common tools that hackers use to hack into memory of computing devices. Detail two (2) real-life examples of such tools in action.

Fedex can purchase large-volume copier : FedEx can purchase a large-volume copier for $18,000 and depreciates it by straight-line depreciation. FedEx has a 35% combined incremental tax rate. If FedEx requires a real 9% after-tax rate of return on its investments, should the firm purchase th..

Ibm stock sells : You write one IBM call contract for a premium of $4 and an exercise price of $120. You hold the option until the expiration date, when IBM stock sells for $121 per share. You will realize a ______ on the investment.

How many 6-word sentences can be made : How many 6-word sentences can be made using each of the 26 letters of the alphabet exactly once? A word is defined as a nonempty (possibly jibberish) sequence of letters.

Assume that wages and prices are sticky : Assume that wages and prices are sticky and that we start at a long run equilibrium. Assume that at this initial point, the growth rate of the money supply is 6%, the growth rate of the velocity of money is 5% and that the real economic growth rate i..

Analyze the encryption protocols used in wireless networks : Briefly describe the difference between Ad Hoc mode and Infrastructure mode.Assess the implications of each mode from an implementation perspective in personal and small-office environments versus large corporate environments.

What are the null and alternative hypotheses : What are the null and alternative hypotheses (state in full sentences)? Run the test using Excel and include the output table. Use a t-test assuming equal variances. What is your recommendation to the executives? Justify your answer referring to the ..

Demand functions for goods : Suppose that Selena Gomez’s preferences for Jusin Beiber tickets (good one) and Nick Jonas tickets (good two) can be represented by the utility function u(x1, x2) = 2x1 + x2. Describe Selena Gomez’s demand functions for goods one and two, x1*(p1,p2,m..

Describe the sample space of different color balls : We draw two balls randomly and simultaneously. Describe the sample space and calculate the probability that the selected balls are of different color, by using two approaches: a counting approach based on the discrete uniform law, and a sequential..

User Account

All Pages