Impact of declining the energy prices on equlibrium prices

Assignment Help Macroeconomics

Reference no: EM1313562

Throughout much of the 1990s, the United States experienced declining energy prices. Assume that the U.S. economy was in long-run equilibrium before these declines began.

a. Use the aggregate demand-aggregate supply model to illustrate graphically the short-run and long-run impact of this decline on output and prices.

b. If the Federal Reserve attempted to offset this deviation from the natural rate in the short run, should the money supply be increased or decreased?

Reference no: EM1313562

Questions Cloud

Policy affect aggregate demand at current prices : Explain how will this combined tax-transfer policy affect aggregate demand at current prices.

Regression model-estimated regression equation : In a regression model involving 30 observations, the following estimated regression equation was obtained:

Cold fusion theory : Cold fusion theory.

What is the frequency of microwaves : A 38.8-cm diameter disk rotates with a constant angular acceleration of 2.60 rad/s2. It starts from rest at t = 0, and the line drawn from the center of the disk to the point P on the rim of the disk makes an angle of 57.3° with the positive x-axis a..

Impact of declining the energy prices on equlibrium prices : Use the aggregate demand-aggregate supply model to illustrate graphically the short-run and long-run impact of this decline on output and prices.

Financial statements prepared at the end of the year : Total recorded sales were $735,000. The portion of these sales that should be recorded as a tax liability and In the financial statements prepared at the end of the current year

Determining the probability of selecting people at arbitrary : If we were to ask three people at arbitrary, determine the probability that they will all prefer punk rock?

Process of diffusion of blood and hormone functioning : The process of diffusing blood under pressure is termed as ______; this takes place in the ______ and eliminates all the small molecules from blood, the process of ______ then follows.

A farmer owns a plot of ground also sells : A farmer owns a plot of ground also sells the right to pump crude oil from his land to a crude oil producer.

User Account

All Pages