User Account

All Pages

What is the new natural rate

Assignment Help Business Economics
Reference no: EM133126211

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: EM133126211

Questions Cloud

What will be the new level of sales : One of Muddabber Potterys most popular items is a brie baker. When Mr. Swayze, the owner of the pottery, used it as a promotion, he gave away 724 of the bakers.
Explain the democratic and non-democratic countries : The mean CC for democratic countries equals [1.38 and the standard deviation equals 0.99. In contrast, for non-democratic countries the mean CC equals -[l.6 and
Improve governance and government accountability : Consider a donor who is contemplating to fund a large aid project in a poor country with the purpose to improve governance and government accountability in that
Multidimensional measurement of poverty a break : How is the multidimensional measurement of poverty a break with poverty threshold-based measurements (relative)?
What is the new natural rate : 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.
Gender difference in the average salary in profession : Does the evidence statistically support the hypothesis that there is no gender difference in the average salary in this profession? Explain.
Compute the current ratio and gross profit margin ratio : Compute the current ratio, gross profit margin ratio, inventory turnover days and Quick/Acid test for the four years - Discuss two possible concerns Erica
Private market equilibrium price and quantity : Exxon Mobil Corp. is among the eight companies whose fuel was responsible for a third of emissions from oil and gas, according to non-profit environmental group
Enron power marketing inc : Based on your analysis of the "Enron Power Marketing Inc. and the California Market case:

Reviews

Write a Review

Business Economics Questions & Answers

  Suppose an economy begins in steady state

Suppose an economy begins in steady state. By what proportion does per capita GDP change in the long run in reponse to each of the following changes? Production function is Y=AK^1/3L^2/3

  Q1 at the time of rusals concern primary aluminum prices

q1. at the time of rusals concern primary aluminum prices were relatively high at 3600 per metric ton. at this price

  Full-employment equilibrium

If the economy was working at full-employment equilibrium, illustrate the state of equilibrium after the fall in consumer confidence.

  Labor demand curve in a perfectly competitive factor market

The labor demand curve in a perfectly competitive factor market is the horizontal sum of all firms' _____ product of labor curves.

  What outcomes are possible if both employees are rational

An ice cream company has hired two sales persons to run two ice cream stores on a beach. These two employees will receive a fixed salary regardless of the number of ice creams that they sell and they have to charge the same price set by the company. ..

  Dollars given that the firm executes a money market hedge

Using the information above, what will be the approximate value of these exports in 1 year in U.S. dollars given that the firm executes a forward hedge? What will be the approximate value of these exports in 1 year in U.S. dollars given that the firm..

  Government insurance through medicare and medicaid

Many economists believe that the United States has become too reliant on health insurance, especially for small or routine expenditures. They believe that exces

  Responsible for managing the us money supply

1. The Federal Reserve is responsible for managing the U.S. money supply.

  Consumption of music increases

Dusty derives utility from 3 goods: music (M), wine (W), and cheese (C). His utility function is given by: u(M,W,C) = M + 2W + C. Show that Dusty’s MRS of wine for cheese is constant for all values of W and C on the indifference curves calculated in ..

  By what percentage amount did the rates change

The data in Figure end in 2012. Visit oanda.com (or another site with daily exchange rate data) and download data on the same exchange rates.

  Q1 assume which parliament passes a law to permanently cut

q1. assume which parliament passes a law to permanently cut taxes starting the next year. assuming which consumers are

  What is the economic profit of the farm

Suppose that a farm produces 200,000 units a year and sells them all for $10 each the explicit cost of production are 1.5 million and the implicit cost

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