Refer to Table 26-5. Suppose the table above illustrates the values of real and potential GDP and the price level if the Fed does not vote to change their current policy to be more contractionary or expansionary
Suppose that the Fed uses an appropriate policy and is successful in keeping real GDP at potential in 2017. State whether each of the following will be higher or lower than if the Fed had taken no action:
a. Real GDP
b. Potential real GDP
c. The price level
d. The unemployment rate
If the Fed's policy was successful, real GDP in 2017 will rise from $18.5 trillion to the level of potential GDP in 2017 which is $18.7 trillion. Potential GDP is not influenced by monetary policy so it should stay at $18.7 trillion. Since expansionary monetary policy increases AD, the short-run equilibrium will move up the short-run aggregate supply curve and the price level will be higher. Finally, because the level of real GDP is higher with policy, the unemployment rate will be lower than it would have been without the change in policy.
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Any event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.
Answer the following statement true (T) or false (F)
An import quota is a
A) tariff imposed on goods that are dumped in the country. B) law that prevents ecologically damaging goods from being imported into a country. C) market-imposed balancing factor that keeps prices of imports and exports in equilibrium. D) government-imposed restriction on the quantity of a specific good that can be imported.
"The tax on insulin in the Philippines is anywhere between 10 and 20 percent. If you are rich and living in the Philippines, this is not a problem, but if you are poor, then insulin becomes something that you cannot afford"
If the government places the tax on sellers, what is the effect on the supply and demand curves? A) The demand curve stays the same and the supply curve shifts leftward. B) The demand curve shifts rightward and the supply curve stays the same. C) Both the demand and supply curves shift leftward. D) The demand curve shifts leftward and the supply curve stays the same.
A positive technological change will cause the quantity of a good supplied to increase
Indicate whether the statement is true or false