Macroeconomics Answers

the Federal Reserve in 2008 faced a decrease in aggregate demand caused by the housing and financial crises and a decrease in short-run aggregate supply caused by rising commodity prices.

a. Starting from a long-run equilibrium, illustrate the effects of these two changes using both an aggregate-supply/aggregate-demand diagram and a Phillips-curve diagram. On both diagrams, label the initial long-run equilibrium as point A and the resulting the short-run equilibrium as point B. For each of the following variables, state whether it rises or falls, or whether the impact is ambiguous: output, unemployment, the price level, the inflation rate.

b. Suppose the Fed responds quickly to these shocks and adjusts monetary policy to keep unemployment and output at their natural rate. What action would it take? On the same set of graphs from part (a), show the results. Label the new equilibrium as point C.

c. Why might the Fed choose not to purse the course of action described in part (b)?

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69. Which of the following is not one of the basic economic questions that all economic systems must answer?
a.Who will receive the goods produced?
b.What is the highest opportunity cost method of producing each good?
c.How much of each resource is devoted to the production of each good?
d.What will be produced?

IIf Potomac knows that the arc price elasticity of demand for its ovens is –3.0, what price would Potomac have to charge to sell the same number of units it did before the Spring City price cut?
I have the equiation of: (1500/5250)/(P - 500)/{P-500/(500 + P)/2 = -3

Solve for the price I need

d) If a government chooses to implement a National Minimum Wage Policy what important questions must that government address and what would the answers be?

What are the implications of using monetary compression to correct the inflationary effects of negative supply shocks?

If the money supply is growing at 7 percent, the real interest rate is 3 percent, and the real of growth rate of GDP is 2 percent, what should the nominal interest rate be?

Discuss how you would estimate the population regression function(the sample regression function) is a good estimate of the true population regression function for a sample of data of your own choice