How does an economy produce a sustained equilibrium high rate of inflation in the medium run...

How does an economy produce a sustained equilibrium high rate of inflation in the medium run with no change in the equilibrium value of the real exchange rate or in that of the economy’s international investment position?

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Rahul Sunny answered 8 months ago

QUESTION 30 Suppose the economy is in long-run equilibrium at an inflation rate of 1% Then...

QUESTION 30 Suppose the economy is in long-run equilibrium at an inflation rate of 1% Then inflation expectations rise to 2% and inflation rises to 3%. The increase in expected inflation shifts the short-run Phillips curve a. left. Overall, unemployment moves above its natural rate. b. left. Overall, unemployment moves below its natural rate. c. right. Overall, unemployment moves below its natural rate. d. right. Overall, unemployment moves above its natural rate. At a given price level, an increase in...

Assume that the economy is at a long-run equilibrium, with unemployment at 5%, and inflation at...

Assume that the economy is at a long-run equilibrium, with unemployment at 5%, and inflation at 2% pa. Suppose a shock causes a very large increase in the cost of crude oil and gas. Assume that Ireland does not produce any oil or gas, and imports large amounts of oil and gas. The shock causes unemployment to rise to 9%, and inflation to rise to 4% pa. Using the data, write out the equation of the Phillips curve before, during,...

Suppose the U.S. economy was in both short-run and long-run equilibrium, until the economy experienced inflation....

Suppose the U.S. economy was in both short-run and long-run equilibrium, until the economy experienced inflation. a. Which policy would be consistent with the goals of monetary policy during this time? The Fed repos $25 billion worth of Treasury bonds to non-bank financial firms. The Fed reduces the discount rate from 7 percent to 5 percent. The Fed reduces the reserve ratio from 20 percent to 15 percent. The Fed sells securities worth $100 million to financial institutions.

Assume that the economy is at long run equilibrium,with unemplyment at 5% and inflation at 2%pa....

Assume that the economy is at long run equilibrium,with unemplyment at 5% and inflation at 2%pa. Suppose a shock causes a very large increase in the cost of crude oil and gas. Assume that Ireland does not produce any oil or gas, and imports large amounts of oil and gas. The shock causes unemployment to rise to 9%, and inflation to rise to 4%pa. (a) Using a large AD/AS diagram and a large Phillips curve diagram, illustrate the short-run effects...

What determines the inflation rate in the long run? How might inflation in the long run...

What determines the inflation rate in the long run? How might inflation in the long run be related to fiscal policy? What is seigniorage?

Suppose the economy is initially at the medium-run equilibrium. Suppose because of less competition the mark-up...

Suppose the economy is initially at the medium-run equilibrium. Suppose because of less competition the mark-up goes up. Please answer the following questions to go through the impacts of this on macro-economy both in the short run and medium run: (1) Draw the AS-AD graph. Mark the original equilibrium position before this monetary policy. Explain the shift of either the AS or AD curve and describe carefully how the economy adjusts from the short-run equilibrium to the medium-run equilibrium. (2)...

1. Suppose the economy is initially at the medium-run equilibrium. Now FED decides to increase money...

1. Suppose the economy is initially at the medium-run equilibrium. Now FED decides to increase money supply to stimulate the economy. Please answer the following questions to go through the impacts of this expansionary monetary policy on macro-economy both in the short run and medium run: (1) Draw the AS-AD graph. Mark the original equilibrium position before this monetary policy. Explain the shift of either the AS or AD curve and carefully describe how the economy adjusts from the short-run...

Suppose the economy is initially at the medium-run equilibrium. Suppose because of less competition the mark-up...

Suppose the economy is initially at the medium-run equilibrium. Suppose because of less competition the mark-up goes up. Please answer the following questions to go through the impacts of this on macro-economy both in the short run and medium run: Draw the AS-AD graph. Mark the original equilibrium position before this monetary policy. Explain the shift of either the AS or AD curve and describe carefully how the economy adjusts from the short-run equilibrium to the medium-run equilibrium. In the...

Suppose the economy is initially in long-run equilibrium and experiences a favourable inflation shock. a) Explain...

Suppose the economy is initially in long-run equilibrium and experiences a favourable inflation shock. a) Explain how the SRAS line is affected in the short-run. b) Use your result for part (a) along with the AD-AS diagram to illustrate and explain what will happen to output and inflation in both the short-run and the long-run if the Reserve Bank accommodates the favourable inflation shock. c) Use your result for part (a) along with the AD-AS diagram to illustrate and explain...

An economy is experiencing very high inflation. The monthly inflation rate for September is 112%. What...

An economy is experiencing very high inflation. The monthly inflation rate for September is 112%. What is the daily inflation rate?

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How does an economy produce a sustained equilibrium high rate of inflation in the medium run...

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QUESTION 30 Suppose the economy is in long-run equilibrium at an inflation rate of 1% Then...

Assume that the economy is at a long-run equilibrium, with unemployment at 5%, and inflation at...

Suppose the U.S. economy was in both short-run and long-run equilibrium, until the economy experienced inflation....

Assume that the economy is at long run equilibrium,with unemplyment at 5% and inflation at 2%pa....

What determines the inflation rate in the long run? How might inflation in the long run...

Suppose the economy is initially at the medium-run equilibrium. Suppose because of less competition the mark-up...

1. Suppose the economy is initially at the medium-run equilibrium. Now FED decides to increase money...

Suppose the economy is initially at the medium-run equilibrium. Suppose because of less competition the mark-up...

Suppose the economy is initially in long-run equilibrium and experiences a favourable inflation shock. a) Explain...

An economy is experiencing very high inflation. The monthly inflation rate for September is 112%. What...