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Macroeconomics 6th Edition by Robert Hall,Marc Lieberman
Edition 6ISBN: 978-1111822354Macroeconomics 6th Edition by Robert Hall,Marc Lieberman
Edition 6ISBN: 978-1111822354 Exercise 1
Suppose that a law required the Fed to do everything possible to keep the inflation rate equal to zero. Using AD and AS curves, illustrate and explain how the Fed would deal with (a) a negative demand shock from a decrease in investment spending and (b) an adverse aggregate supply shock. What would be costs and benefits of such a law?
Explanation
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a) The Fed would increase the money supp...
Macroeconomics 6th Edition by Robert Hall,Marc Lieberman
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