1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
BlackZzzverrR [31]
3 years ago
10

Fed could change its inflation target temporarily to offset the effect of an aggregate demand shock (a-bar). In this problem, yo

u can calculate by how much. Suppose that the economy starts in the steady state in 2021 with pi-bar = 2%, b-bar = 1/2, m-bar = 1/2, and v-bar= 1/2. An AD shock equal to a-bar = 2% occurs in 2021.
a. Using the simple monetary policy rule, show by how much inflation and short-run output change in 2021 if the Fed keeps its target inflation equal to 2%. Calculate inflation and short-run output for 2022 and 2023.

b. Use an AD/AS diagram to show how a decrease in the inflation target can keep inflation and short-run output from starting to rise in 2021. Explain your diagram and what it reveals about monetary policy.
c. Calculate how much the Fed needs to lower its inflation target pi-bar below 2% to keep inflation and short-run output from rising.
d. Suppose the Fed adopts a Taylor rule. Show how adding a term nY (n-bar Y-bar) to the simple monetary policy rule changes the shift in the AD curve following an aggregate demand shock a-bar n the AD equation. Using the parameter values for this question, calculate the value of n-bar for the Fed that keeps inflation and short-run output from rising.
Business
1 answer:
larisa [96]3 years ago
7 0

Answer:

b. Use an AD/AS diagram to show how a decrease in the inflation target can keep inflation and short-run output from starting to rise in 2021. Explain your diagram and what it reveals about monetary policy.

You might be interested in
Bill and rosie have been happily married for 40 years. they have never spent more than two nights apart. bill has been battling
lana66690 [7]
Hospice care 
Care designed to give supportive care to people in the final phase of a terminal illness and focus on comfort and quality of life, rather than cure. The goal is to enable patients to be comfortable and free of pain, so that they live each day as fully as possible.
6 0
3 years ago
Jamie earned a raise in pay when he finished the training for the Technician 2 position. He will receive another raise when he f
coldgirl [10]

Answer: Structured compensation program

Explanation: In a structured compensation program the company structures the pay of employees on the basis of a predetermined criteria. The abilities needed to get promotion in such structure could be fixed on the basis of time period served or any other such criteria.

In the given case, Jamie gets promotion at every stage by passing a certain test. Thus, we can conclude that the company is performing structured program.

5 0
3 years ago
Businesses can be classified into the following forms: sole proprietorship, partnership, corporation, limited liability company
algol [13]

Answer:

b) Income is allocated on a pro rata basis

Explanation:

A partnership is an agreement between two or more people to oversee a business and share in the profit and losses made by the business.

In a partnership when income comes in it is shared.on a pro rata basis.

This means income is given based on the level of ownership of the business.

For example a partner that has 60% ownership of the partnership is expected to collect 60% of the business income.

Pro rata is also called proportional rate.

8 0
3 years ago
Coca-Cola acquired its bottlers and created a national vertically integrated business operation in 2010. After spending 12.3 bil
Svet_ta [14]

Answer:

True

Explanation:

Coke tried to diversify into the bottling industry by acquiring their bottlers and in the process creating a vertically integrated business. However, 5 years later, they did find out how difficult it was and it led to a failed diversification effort when sold off their bottling operations. This was majorly due to the fact that the bottling business required too much capital investment and time. Capital investment and time that an already large enterprise like coca cola couldn't afford at that period. The initial aim was to have control over the whole production process, but soon after the diversification failed, they went back to producing just the concentrates.

7 0
3 years ago
Read 2 more answers
Your company is considering purchasing a machine for $270,000. This machine will bring revenues of $100,000 in the second year,
kumpel [21]

Answer:

Yes we should go with this project because it has a positive NPV of $4,350

Explanation:

We need to calculate the net present value of the machine to decide whether to invest in the machine or not.

As per Given Data

Costs $270,000

Cash Inflows

Year 2      $100,000

Year 3      $150,000

Year 4      $75,000

Interest Rate = 6%

Net Present Value

As we know Net Present value is calculated by discounting each years cash flows using using the Weighted Average cost of Capital.

Year       Cash Inflows    Discount factor 13%  Present values

Year 0      $(270,000)     (1+6%)^-0                 $(270,000)

Year 2      $100,000        (1+6%)^-2                 $89,000

Year 3      $150,000        (1+6%)^-3                 $125,943

Year 4      $75,000          (1+6%)^-4                 <u>$59,407  </u>

Net present value                                            <u>$4,350   </u>

7 0
3 years ago
Other questions:
  • a customer has invested 20000 in a variable annuity. in the first year nav increases to 21100 at what rate wsill 1100 gain be ta
    10·1 answer
  • Only 3 days after the attacks of 9-11, Northwestern Mutual began providing death benefits to surviving families of the first res
    15·1 answer
  • Consider a file whose size varies between 4 kb and 4 mb during its lifetime. which of the three allocation schemes (contiguous,
    13·1 answer
  • The physician has asked the medical assistant to provide patient education for hypertension. What is the best way to provide thi
    8·1 answer
  • Greta has liability and collision insurance, but no comprehensive insurance on her 2009 Honda Accord. One night, it is stolen fr
    9·2 answers
  • What happens to the stockholders when a corporation files for bankruptcy?a. The stockholders must also file for bankruptcyb. the
    8·2 answers
  • Kevin fidgets and taps on things, sighs often, squirms, constantly checks the time, and yells at people when they ask him how a
    11·1 answer
  • ncome Statements Segmented by Products Francisco Consulting Firm provides three types of client services in three health-care-re
    15·1 answer
  • Applying the concept of marginal costs, how would you, as a business owner, decide how much to produce?.
    5·1 answer
  • imagine that you are a promoter of concerts and pop-up events. you need to know how well last month's events did in order to mak
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!