What would you recommend the central bank do in terms

Assignment Help Microeconomics

Reference no: EM133367666

Two years later, the Baconia central bank hires you as an economic consultant and has provided you with these statistics on the current economic conditions:

Real GDP = $11.1 trillion

Inflation rate = 3.1%

The BBEA and central bank have determined the following values:

Real potential GDP = $10.6 trillion

Target (or desired) inflation rate = 2.5%

a. What would you recommend the central bank do in terms of its open market operations to bring its economy toward full employment?

b. What would you recommend the central bank do to its discount rate to bring its economy toward full employment?

c. In the long run, if the velocity of money and growth of real output are relatively stable, and if the central bank pursues your recommended policies, what will likely happen to the price level in Baconia?

Reference no: EM133367666

Questions Cloud

Discuss social characteristics of the group : Discuss the social characteristics of the group: low socioeconomic standing, little access to medical care, rural, uneducated, older, and patriarchal.

What are some key points i should talk about in it : What are some key points I should talk about in it. What should I research and put into my literature review on this topic step by step?

How much economic inefficiency aka net social loss does : The government establishes a $3 tariff. Quantity demanded falls to 460 and quantity supplied rises to 425. How much economic inefficiency (aka net social loss

How the innovation process and innovation, management : Read Section 6 again up to this point. Now using an organization or sector that you are familiar with, think through how the innovation process

What would you recommend the central bank do in terms : What would you recommend the central bank do in terms of its open market operations to bring its economy toward full employment?

Central issues that need to be dealt with : What are some examples of central issues that need to be dealt with

What is competent intercultural communication : What is competent intercultural communication? What is the difference between competent intercultural communication and effective intercultural communication?

Describe the pretotype experiment you would set up : Describe the pretotype experiment you would set up. How might you demonstrate customers' skin in the game?

How does this support your claim of homology : How do you know that ancestor possessed this homologous trait? How does this support your claim of homology?

User Account

All Pages