February 20, 2017

Homework Help: macroeconomics

Posted by chipmunk on Wednesday, March 25, 2009 at 7:41pm.

1) Suppoer the economy is operating at full employment and foreign countries raise the world price of oil. Assuming policy-makers do not take any actions,describe what will happen to price and output in the short run and long run.

2) Suppose the Federal Reserve decided it wanted to offset any adverse effects on output. What actions could it take? What would be the consequences for the price level if the Fed used monetary policy to fight unemployment?

3) Economists claim that supply shocks create a dilemma for the Federal Reserve that shocks to demand (for example, from investment) do not create. Explain this point using your answer to (2) and the aggregate demand-and-supply diagram.

4) Economists who believe that the transition from the short run to the long run occurs rapidly do not generally favor active use of stabilization policy. Use the aggregate demand and supply graphs to illustrate how active policy, with a rapid adjustment process, could destablize the economy.

each question needs a diagram to illustrate how it works, can anyone help me to answer the questions please?

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