question archive Suppose that the classical economy is described by the following equations: Aggregate Demand SRAS Okun's law yo'= 4000 + 2 ys = y + 100(P - P') "=" = -2(1 -?) - Full employment output Y = 6000 Natural unemployment ?= 0
Subject:EconomicsPrice: Bought3
Suppose that the classical economy is described by the following equations: Aggregate Demand SRAS Okun's law yo'= 4000 + 2 ys = y + 100(P - P') "=" = -2(1 -?) - Full employment output Y = 6000 Natural unemployment ?= 0.05 1. Suppose that the nominal money supply has long been constant at M 8000 and is expected by the public to remain constant forever. What are the equilibrium values of the price level, P, the expected price level, p', expected inflation, 7t? 2. A totally unexpected increase in the money supply occurs, raising it from 8000 to 8800. What are the short-run equilibrium values of the price level, expected price level, output, and unemployment rate? What are the values of cyclical unemployment and unanticipated inflation?