Business, 27.11.2019 23:31 edith47

Suppose economy is producing the full employment level of output $22 trillion and unemployment rate is at its natural rate of 4.5%. now assume that the central bank unexpectedly increases money supply by 10%.a) illustrate the short-run effects of the monetary policy by using aggregate demand-aggregate supply model. be sure to indicate the direction of change in real gdp, the price level and the unemployment rate. b) illustrate the long-run effects of the monetary policy by using aggregate demand-aggregate supply model. again, be sure to indicate the direction of change in real gdp, the price level and the unemployment rate. c) now assume that this monetary expansion was completely expected. illustrate both short-run and long-run effects on the economy by using aggregate demand-aggregate supply model. again, be sure to indicate the direction of change in real gdp, the price level and the unemployment rate.

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Suppose economy is producing the full employment level of output $22 trillion and unemployment rate...