Factors that monetary strategy makers

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Reference no: EM1311853

Q. "Suppose that instead of persisting as is supposed the decline in the real exchange rate is only temporary in that after the initial change in the price level aggregate demand returns to its original level.

(a) Given that monetary strategy makers, firms also workers all recognize that the decline in the real exchange rate is only temporary also given the 3 strategy responses expressed in part d of problem 2, again calculate Illustrate what the long-run equilibrium price level is also Illustrate what the expected price level is under every response by monetary strategy makers. Again calculate by Elucidate how much monetary strategy makers must change the nominal money supply for the expectations of firms also workers to be realized.

(b)Compare your answers to part d of problem 2 with those of part a of this problem also elucidate why they are different.

(c)Elucidate Illustrate what data or other factors that monetary strategy makers, firms also workers might analyze in attempting to conclude if the decline in the real exchange rate is temporary or will persist. Finally, suppose that monetary strategy makers are better able than firms also workers to conclude if a change in the real exchange rate is temporary or will persist also that firms also workers know this. Given answer also part a of this problem, elucidate how once monetary strategy maker have concluded whether the change in the real exchange rate is only temporary or will persist, they could signal their finding to firms also workers.

Reference no: EM1311853

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