Contractionary monetary policy

Assignment Help Macroeconomics

Reference no: EM1370983

An economy is facing the inflationary gap shown in the accompanying diagram. To eliminate gap, should the central bank use expansionary or contractionary monetary policy? How will the interest rate, investment spending, consumer spending, real GDP, and aggregate price level change as the monetary policy closes the inflationary gap?

Reference no: EM1370983

Questions Cloud

Oligopoly price fixing : Why is it not surprising to find that in the oligopoly which sells basically undifferentiated product like chicken growth hormone all the firms change prices simultaneously, even if there is no explicit price fixing?

How versatility-microsoft excel affect application support : How does this versatility of Microsoft Excel affect application support? With this versatility and possible customization what assumptions must be made

Explain how much does government purchases have to change : Government wants to change its spending in order to avoid a recession. If crowding-out effect is always half as strong as multiplier effect and if MPC equals 0.9, by Explain how much does government purchases have to change.

Illustrate what products or services that made by company : Explain how much and why. This could include things such as mergers, innovative marketing, etc. Illustrate what products and/or services that made by this company.

Contractionary monetary policy : An economy is facing inflationary gap shown in the accompanying diagram. To eliminate gap, should the central bank use expansionary or contractionary monetary policy?

Advantages and disadvantages of using presentation aids : Describe two different presentation aids used in group presentations identify the advantages and disadvantages of your selected aids when used in group presentations.

Illustrate james opportunity cost of producing chickens : Illustrate what is James' opportunity cost of producing chickens. Which person has an absolute advantage in which activities.

Write program simulate checkout line at supermark : Write the program which simulates checkout line at supermarket. Line is a queue object. Customers( i.e customer objects) arrive in random integer intervals of 1-4 minutes.

How far behind the train is the automobile : The automobile afterwards undergoes a uniform acceleration of -4 m/s2 because of a red light and comes to rest. It remains at rest for 54.6s and next accelerates back to a speed of 25.6m/s at a rate of 2.85m/s2.

User Account

All Pages