Question
US inflation kept rising during 2022 until it peaked at 9.1% in June 2022 -- a 40-year high. What type of gap does the US
US inflation kept rising during 2022 until it peaked at 9.1% in June 2022 -- a 40-year high. What type of gap does the US have and what type of expectations? Use the IS-LM-"PC" model to explain why a recession (a "hard landing") might be necessary to get down to "acceptable levels." Use directional arrows in the "Fed" equation to describe what the Fed is doing during the periods when the gap exists, and when it ultimately acts to not only "stabilize " (text pp. 181-182), but also to get it to an "acceptable level." No calculations are necessary. (Note that in October US inflation was 7.7%.)
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Based on the given information the US economy is experiencing a situation of high inflation indicated by the peak inflation rate of 91 in June 2022 wh...Get Instant Access to Expert-Tailored Solutions
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