Question
a) Using both general equilibrium models show graphically what happens in the SR and the LR to r, p, and Y if there is an
a) Using both general equilibrium models show graphically what happens in the SR and the LR to r, p, and Y if there is an increased risk in the financial markets. b) Show graphically (new graph) and state the policy the Fed can use to stabilize the economy when it is in the SR equilibrium. How are the stabilized LR different from the LR if they instead didnt do anything? c) Show graphically (new graph) and state the (3) policies the government can use to stabilize the economy when it is in the SR equilibrium. How are the stabilized LR different from the LR if they instead didnt do anything?
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