Business, 06.05.2020 04:39 swaggyd6603

For each shock identified below, shift the AD curve, the SRAS curve, or both to show its effects on aggregate demand and/or aggregate supply. Then move point E to the new short-run equilibrium to indicate the new price level P and output Y. Assume the economy starts out in long-run equilibrium. a. An exogenous decrease in the velocity of money. Price Level (Y) Output (Y) LRAS AD SRAS E b. An exogenous increase in the price of oil. Price Level (Y) Output (Y) 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 LRAS SRAS AD E c. Now consider how the goals of the Fed influence its response to these shocks. Suppose that in scenario A, the Fed cares only about keeping the price level stable, whereas in scenario B, it cares only about keeping output and employment at their natural levels. Place scenario A and scenario B in the appropriate category describing the Fed's proper response to a decrease in the velocity of money.

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For each shock identified below, shift the AD curve, the SRAS curve, or both to show its effects on...

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