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April 23, 2014

Homework Help: Economics

Posted by Dee on Tuesday, April 29, 2008 at 3:43pm.

Suppose last month's inflation report estimated monthly inflation to be 0.4% over the month. The monetary authorities want inflation to not exceed 2% per year. Estimates of potential output state that our economy is currently near potential output. Unemployment rates have been stable at around 5%, but these rates have been rising slightly in the past months. Give a brief summary of what policy makers might be concerned about and suggest what you might do about it, if anything at all. Support your recommendations with analysis using the AS/AD model to illustrate your points.

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