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I need help with this question Thank you for your help Question 1: For each of the following scenarios, use the Fed model to forecast
I need help with this question
Thank you for your help
Question 1: For each of the following scenarios, use the Fed model to forecast how output, the real interest rate, and inflation will change. I need an answer ASAP!
a. A breakthrough in solar power technology decreases the price of energy. This will shift the (MP or IS or Phillips) curve (downward or upward), causing (no change or an increase or a decrease) in the output gap, (no change or an increase or a decrease) in the real interest rate, and (no change or an increase or a decrease) in inflation.
b. The election of a new president leads households to become more hopeful about their future economic prospects, which leads them to increase their consumption. This will shift the (MP or IS or Phillips) curve (to the right or to the left), causing (no change or an increase or a decrease) in output, (no change or an increase or a decrease) in the real interest rate, and (no change or an increase or a decrease) in inflation.
c. In response to concerns about rising national debt, the federal government passes a new bill that dramatically reduces government spending on education and the military. This will shift the (MP or IS or Phillips) curve (to the right or to the left), causing (no change or an increase or a decrease) in output, (no change or an increase or a decrease) in the real interest rate, and (no change or an increase or a decrease) in inflation.
d. In a shock to financial markets, the Federal Reserve announces that it will decrease the federal funds rate to 3% to 1.5%. This will shift the (MP or IS or Phillips) curve (downward or upward), causing (no change or an increase or a decrease) in the output gap, (no change or an increase or a decrease) in the real interest rate, and (no change or an increase or a decrease) in inflation.
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