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(Module 31) The economy of Dodgelandia is experiencing an inflationary gap. a. How could the Central Bank use monetary policy to return the economy to
(Module 31) The economy of Dodgelandia is experiencing an inflationary gap.
a. How could the Central Bank use monetary policy to return the economy to full employment?
b. Use a correctly labeled graph of the money market to show how this monetary policy would impact the equilibrium interest rate.
c. Describe how the monetary policy in part (a) would affect the AD/AS graph, the aggregate price level and real GDP in Dodgelandia.
(9 points)
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