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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 3
Suppose that, initially, the price level is P 1 and GDP is Y 1 , with no built-in inflation. The Fed reacts to a negative demand shock by neutralizing it. The next time the Fed receives data on GDP and the price level, it finds that the price level is above P 1 and GDP is above Y 1. Give a possible explanation for this finding.
Explanation
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The fed increases the money supply for n...
Macroeconomics 6th Edition by Robert Hall,Marc Lieberman
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