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The Fed uses monetary policy to offset the effects of a recession (high unemployment and falling prices when actual real GDP falls short of
The Fed uses monetary policy to offset the effects of a recession (high unemployment and falling prices when actual real GDP falls short of potential GDP) and the effects of a rapid expansion (high prices and wages). Can the Fed, therefore, eliminate recessions? GDP deflator 120- 110 100+ 90- 80+ 11.5 LRAS, LRAS SRAS, 12 12.5 Real GDP ($ trillions) SRAS AD AD2 (policy) AD
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Exploring Economics
Authors: Robert L Sexton
5th Edition
978-1439040249, 1439040249
