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Author Question: What is the natural level of output?[br][br][b][color=#347235]Question 2[/color][/b][br][br]Suppose ... (Read 117 times)

nautica902

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on: Jun 30, 2018
What is the natural level of output?

Question 2

Suppose the real interest rate in the economy is 3 and the nominal interest rate is 6, what is the current inflation rate?
 a. 18
  b. 9
  c. 2
  d. 3
  e. 2.5


blfontai

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Reply #1 on: Jun 30, 2018
Answer to Question 1

It is the level of output in the long run where aggregate supply is vertical with respect to changes in the price level. This position is determined by the natural level of output, which reflects the levels of capital, land, labor, and technology in the economy.

Answer to Question 2

d


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