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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.

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ABC Lumber spent $1,000 cutting down a tree. The result was 40 unfinished logs that sell for $20 each and 100 bags of sawdust th
CaHeK987 [17]

Answer: below

Explanation:

- The sawdust should be sold as is without being processed into Presto

Logs.

- The pieces of unfinished lumber should be processed

8 0
3 years ago
Imprudential, Inc., has an unfunded pension liability of $800 million that must be paid in 24 years. To assess the value of the
Anon25 [30]

Answer:

101.12 million

Explanation:

<em>The present value of a future cash flow is the amount that can be invested today at a particular rate for a certain number of years to have the future cash flow </em>

The present value of the liability

= FV × (1+r)^(-n)

= 800  × (1.09)^(-24)

= 101.12 million

The present value of this liability= 101.12 million

7 0
3 years ago
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Under the all-events test, in addition to specifying that all events to establish the liability must have occurred, the test als
IgorC [24]

Answer:

TRUE

Explanation:

It is true that under the all-events test, in addition to specifying that all events to establish the liability must have occurred, the test also provides that the business must be able to determine the amount of the liability with reasonable accuracy

Under Sec. 461(h), a three-prongall-events test is met when

(1) all events have occurred that establish the fact of the liability;

(2) <u>the amount of the liability can be determined with reasonable accuracy</u>; and

(3) economic performance has occurred.

8 0
3 years ago
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5) An advertiser is launching a campaign to educate people on its new products. The products are complex and require more detail
jek_recluse [69]

Answer:

The advertiser should optimize the Clicks metric

Explanation:

Remember, we are told that the products are complex and require more detailed explanation than possible in the ads, so it implies improving the clicks metric (number of clicks per user) allows the advertiser to understand whether the users are interested in the ad or web page so as to adjust strategy accordingly.

3 0
3 years ago
Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Calculate the adjusted
Reptile [31]

Answer: a.$4,576

Explanation:

Sometimes the cash balance according to the books is not the same as the cash in the bank account and this is due to some transactions not being recorded by either the bank or the firm.

Adjusted cash balance per books = Unadjusted cash balance + Note receivable and interest collected by bank - Bank charge for check printing - NSF Check

= 4,022 + 746 - 28 - 164

= $4,576

3 0
2 years ago
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