Business, 24.05.2020 01:58 brandyjune9546

The medium-run equilibrium is characterized by four conditions:
1. Output is equal to potential output Upper Y equals Upper Y Subscript n.
2. The unemployment rate is equal to the natural rate u equals u Subscript n.
3. The real policy interest rate is equal to the natural rate of interest r Subscript n where aggregate demand equals Upper Y Subscript n.
4. The expected rate of inflation pi Superscript e is equal to the actual rate of inflation pi.
Which of the following best characterizes the behavior of inflation in a medium-run equilibrium if the level of expected inflation is formed so pi Superscript e equals pi (negative 1)?
a. If expectations of inflation are formed so that πt = πt-1, characterize the behavior of inflation in a medium-run equilibrium.
b. If the level of expected inflation is πbar, what is the level of inflation in the medium-run equilibrium?
c. Write the IS relation as Y = C(Y-T) + I(Y, r+x) + G. Suppose rn is 2%. If x increases from 3 to 5%, how must th/e central bank change rn to maintain the existing medium-run equilibrium?
d. Suppose G increases. How must the CB change rn to maintain the existing medium-run equilibrium?
e. Suppose T decreases. How must the CB change rn to maintain the existing medium-run equilibrium?

Answers: 3

Show answers

Other questions on the subject: Business

Business, 21.06.2019 21:00, yasmineeee96371

Jurvin enterprises is a manufacturing company that had no beginning inventories. a subset of the transactions that it recorded during a recent month is shown below. $76,700 in raw materials were purchased for cash. $71,400 in raw materials were used in production. of this amount, $66,300 was for direct materials and the remainder was for indirect materials. total labor wages of $151,700 were incurred and paid. of this amount, $134,300 was for direct labor and the remainder was for indirect labor. additional manufacturing overhead costs of $126,300 were incurred and paid. manufacturing overhead of $126,800 was applied to production using the company's predetermined overhead rate. all of the jobs in process at the end of the month were completed. all of the completed jobs were shipped to customers. any underapplied or overapplied overhead for the period was closed to cost of goods sold. required: 1. post the above transactions to t-accounts.2. determine the cost of goods sold for the period.

Answers: 1

continue

Business, 22.06.2019 14:10, gia2038

Carey company is borrowing $225,000 for one year at 9.5 percent from second intrastate bank. the bank requires a 15 percent compensating balance. the principal refers to funds the firm can effectively utilize (amount borrowed − compensating balance). a. what is the effective rate of interest? (use a 360-day year. input your answer as a percent rounded to 2 decimal places.) b. what would the effective rate be if carey were required to make 12 equal monthly payments to retire the loan?

Answers: 1

continue

Business, 22.06.2019 14:20, deisyy101

Frugala is when sylvestor puts $2,000 into 10-year state bonds and $3,000 into 5-year aaa-rated bonds in steady hand hardware, inc. he buys the four state bonds at a 5 percent interest rate and the three steady hand bonds at a 6.5 percent rate. sylvestor also buys $1,500 worth of blue chip stocks, and $800 worth of stock in a promising new sportswear company that reinvests its earnings in new growth. 1. (a) what is the maturity for each of the bond groups sylvestor buys? (b) the coupon rate? (c) the par value?

Answers: 3

continue

Business, 22.06.2019 14:50, demarcuswiseman

Prepare beneish corporation's income statement and statement of stockholders' equity for year-end december 31, and its balance sheet as of december 31. there were no stock issuances or repurchases during the year. (do not use negative signs with your answers unless otherwise noted.)

Answers: 2

continue

You know the right answer?

The medium-run equilibrium is characterized by four conditions:
1. Output is equal to potenti...