User Account

All Pages

Make output equal to potential output

Assignment Help Business Economics
Reference no: EM133127145

Suppose that right now the AE schedule is: Y=5000 - 200r  (where r is the real rate stated in percentage terms). Both expected and actual inflation are zero. Potential output (Y*) is 4200.

  1. What r must the Fed bring about in order to make output equal to potential output?
  2. If spending collapses and AE becomes Y= 4000 -200r, what is the new natural rate? Can the Fed offset the spending shock and keep Y = Y*? How? If they cannot, why not? 
  3. If the Fed does the best they can do following the spending shock, what will the level of Y be?
  4. Suppose that the Phillips curve implies that a fall in output of 200 below potential output causes inflation to fall by 1 percentage point below what it was expected to be, and that inflation expectations are adaptive. Next period, given that the Fed does the best it can do, what will the level of Y be? Why?

Reference no: EM133127145

Questions Cloud

Difference between apec and the eu : What would be a good description of the "difference" between APEC and the EU?
What is the total profit from by products : Desired profit on C and D (P2,000 and P1,500). If the joint costs are allocated to by-products using the net realizable value, what is the total profit
America involvement in world war ii : What is important to know about America's involvement in World War II?
Ethical culture powerpoint : Prepare a Power Point building a solid ethical culture for your existing company/ or choose one of your choice:
Make output equal to potential output : Suppose that right now the AE schedule is: Y=5000 - 200r (where r is the real rate stated in percentage terms). Both expected and actual inflation are zero.
Compute the alpha for fund : The mean returns, standard deviations, and betas for three funds and the market are given below:
Discuss how role and function of budgeting : Discuss how the role and function of budgeting has been utilized to correct externalities and other market failures
Would you like to familiarize yourself with testing process : Would you like to familiarize yourself with the testing process? How about practicing your typing or data entry just as it would appear in your testing session
Globalization and international migration are inseparable : Globalization and international migration are inseparable. Globalization is a driving force that contributes to people migrating around the world. On the other

Reviews

Write a Review

Business Economics Questions & Answers

  What is a possible downside for a bank

What is a possible downside for a bank to have too much liquidity in the form of reserves?

  Explain why income inequality has changed in recent history

Explain why income inequality has changed in recent history. In the United States, what are some of the reasons for a less equal distribution of income over the past two decades? How has this been reflected in society, particularly in light of the qu..

  Operating increases and decreases

What are some budget benefits that might come from both emergent threat priority and Salary and operating increases and decreases?

  Make sense for most employees at the firm

Your firm has been offering a combination of salary and stock options for employees. An entry level electrical engineer earns $75,000 plus $25,000 in stock options. Your accountant tells you this is cheaper than paying him only in salary. Explain why..

  Inverse demand function equal to the inverse

If you set the inverse demand function equal to the inverse supply function you can solve for the equilibrium quantity. (Qd=Qs).

  Identify the educational field

21st-century skills: Compare and contrast what the authors identify as 21st-century skills with what you would identify as 21st-century skills.

  What will be the economic order quantity

If Mercedes Benz realizes that its annual demand for 500SEL model is 50,000 and their cost of order preparations is $42,000.00 and the inventory carrying cost per car per year is $3,600.00. What will be the Economic Order Quantity?

  What is the value of the total position

Suppose after a year the S&P 500 is $954 and the portfolio is worth $95 million. The options premium is $1 million. What is the value of the total position?

  Compute the percentage change in the quantity demanded

2. Compute the percentage change in the quantity demanded for x if the old price of x is 10 pesos and the new price of x is 15 pesos Hint: a percentage change i

  Piece of pizza piece of pizza three total utility seven

How much marginal utility does Joseph arrive from third piece of pizza piece of pizza three total utility seven

  What is the equation for national saving

What is the equation for national saving? Calculate the equilibrium interest rate, aggregate level of investment in the economy, and the aggregate level of national saving. Illustrate in a diagram.

  What is meant by the term elasticity of demand

What is meant by the term 'elasticity of demand'? What are the main factors influencing the elasticity of demand?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd