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This is the problem. Thank you so much for your help. Suppose we are analyzing the AD-AS model and the market for money with the

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This is the problem. Thank you so much for your help.

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Suppose we are analyzing the AD-AS model and the market for money with the theory of liquidity preferences. (20 points) 9. Suppose the economy is in stagnation. Illustrate this short run equilibrium in the AD-AS model (include all curves). Label the equilibrium point as point A. (4 points) In. Suppose policy makers are committed to stabilizing output and unemployment. What is an appropriate monetary policy response that will increase output and reduce unemployment in the short run? (4170mm) c. Use the market for money to graphically show how the policy response from part (b) will affect interest rate in the economy. (4 points) d. Illustrate the effects of the policy response from part (b) in the AD-AS model, label the new short run equilibrium points in both gures as point B (use the graph from part a). (4 points) 9. According to the sticky-wage theory of aggregate supply, how do Nominal wages at point A compared to real wages in point B? (2 points) f. According to the sticky-wage theory of aggregate supply, how do real wages at point A compared to real wages in point B? (2 pts)

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