Do you think fed chairman was a good appointment

Reference no: EM13199565

The economy begins in long-run equilibrium. Then one day, the president appoints a new chairman of the Federal Reserve. This new chairman is well-known for his view that inflation is not a major problem for an economy.

a. How would this news affect the price level that people would expect to prevail?

b. How would this change in the expected price level affect the nominal wage that workers and firms agree to in their new labor contracts?

c. How would this change in the nominal wage affect the profitability of producing goods and services at any given price level?

d. How does this change in profitability affect the short-run aggregate-supply curve?

e. If aggregate demand is held constant, how does this shift in the aggregate-supply curve affect the price level and the quantity of output produced?

f. Do you think this Fed chairman was a good appointment?

Reference no: EM13199565

Questions Cloud

Methodologies in terms of market risk evaluation : Value-at-Risk (VaR) is defined as the probability of suffering a loss in excess of a given threshold or confidence interval. Can you analyse and appreciate the existing VaR methodologies in terms of market risk evaluation?

How to maintain software at the clients site : A recent internal study revealed that this client's demand for your software is Q^d = 100 - 0.1P and that it would cost you $500 per unit to install and maintain software at this client's site. the profit that results from charging this client a si..

How much should the firm charge for this package : A monopoly is considering selling several units of a homogenous product as a single package. A typical consumer's demand for the product is Q^d = 50 - 0.25P, and the marginal cost of production is $120. Determine the optimal number of units to put ..

Was slavery necessary for the growth of the cotton industry : What was the relationship between cotton and the slave economy in the antebellum American South. was cotton expansion necessary for the continuation of slavery. Was slavery necessary for the growth of the cotton industry.

Do you think fed chairman was a good appointment : The economy begins in long-run equilibrium. Then one day, the president appoints a new chairman of the Federal Reserve. This new chairman is well-known for his view that inflation is not a major problem for an economy.

Evaluate a companys pricing and retail strategy : Evaluate a companys pricing and retail strategy. Include analysis of the current market situation and the competitive strategy. Make sure to choose a company that you are familiar with and one that you have not used for other modules in the course..

Why the wage contracts have short durations : Suppose the Federal Reserve announced that it would pursue contractionary monetary policy to reduce the inflation rate. Would the following conditions make the ensuing recession more or less severe.Wage contracts have short durations.

How to know which is pareto efficient economy : If the output changed to 75 units of bread and 60 units of butter, the profit of the butter firm would go up by $42. The profit of the bread firm would go down by $76. 50 units of butter which the consumed by the consumer.

Draw expiry payoff diagram for the trader total portfolio : Draw the expiry payoff diagram for the trader total portfolio. Make sure you annotate the diagram fully and what are the no-arbitrage lower and no-arbitrage upper boundaries for the value of the trader's total portfolio?

User Account

All Pages