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Author Question: Refer to Figure 17-1. Suppose that the economy is currently at pointAon the short-run ... (Read 100 times)

casperchen82

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on: Mar 16, 2019

Question 1

Figure 17-1










Refer to Figure 17-1.  Suppose that the economy is currently at point A, and the unemployment rate at A is the natural rate. What policy would the Federal Reserve pursue if it wanted the economy to move to point C in the long run?


◦ Buy treasury bills.
◦ Sell treasury bills.
◦ Lower the discount rate.
◦ Increase the money supply.
◦ No policy will move the economy to point C in the long run.

Question 2

Figure 17-1










Refer to Figure 17-1.  Suppose that the economy is currently at point A on the short-run Phillips curve in the figure above, and the unemployment rate at A is the natural rate. If the economy was to move to point B, which of the following must be true?


◦ The economy is producing a level of GDP equal to potential GDP.
◦ Aggregate demand must have increased.
◦ Equilibrium GDP at point B must be below potential GDP.
◦ The Fed conducted expansionary policy to cause the move.
◦ The Fed purchased treasury bills to cause the move.
Macroeconomics ¦ Hubbard, O'Brien ¦ 6th Edition
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Marked as best answer by casperchen82 on Mar 16, 2019

asdfasdf

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Reply #1 on: Mar 16, 2019
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casperchen82

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Reply 2 on: Mar 16, 2019
Wow, this really help

AngeliqueG

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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