Of the five endogenous variables in the dynamic model of aggregate demand and aggregate supply, which are the real variables that do not depend on the monetary policy in long-run equilibrium? A) Y_t and $\pi$_t B) i_t and r_t C) E_t $\pi$_{t + 1} and $\pi$_t D) Y_t and r_t

Question

Quizplus · Accepted Answer

In long-run equilibrium, the real variables that do not depend on monetary policy are the potential output (Y_t) and the natural rate of unemployment (r_t). Therefore, option D is the correct answer.

Of the Five Endogenous Variables in the Dynamic Model of Aggregate