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In the short run, the price level will be be 150 and real GDP will be 100 and real gross domestic product (GDP) will be $6 billion. Assume that the economy is still in short-run equilibrium following the increase in government purchases. In order to bring the economy back to its full-employment level, the central bank can increase the money supply, which leads to a shift in the aggregate demand curve. $4 billion. In the long run, the price level will Why is it difficult for the Bank of Canada to shift the aggregate demand curve precisely? Check all that apply. The Bank of Canada does not lend to banks and financial institutions. Data about the state of the economy Are not available in real time. The Bank of Canada does not fully control the money supply. Economists debate whether monetary policy should be made by discretion or implemented according to a set of rules. with which of the following statements are advocates of discretion likely to agree? The Bank of Canada should not try to adjust to every aggregate demand shock. On average, the Bank of Canada's adjustments to aggregate demand shocks push the economy in the right direction. The Bank of Canada is likely to make a lot of mistakes when trying to adjust to aggregate demand shocks.

In the short run, the price level will be be 150 and real GDP will be 100 and real gross domestic product (GDP) will be $6 billion. Assume that the economy is still in short-run equilibrium following the increase in government purchases. In order to bring the economy back to its full-employment level, the central bank can increase the money supply, which leads to a shift in the aggregate demand curve. $4 billion. In the long run, the price level will Why is it difficult for the Bank of Canada to shift the aggregate demand curve precisely? Check all that apply. The Bank of Canada does not lend to banks and financial institutions. Data about the state of the economy Are not available in real time. The Bank of Canada does not fully control the money supply. Economists debate whether monetary policy should be made by discretion or implemented according to a set of rules. with which of the following statements are advocates of discretion likely to agree? The Bank of Canada should not try to adjust to every aggregate demand shock. On average, the Bank of Canada's adjustments to aggregate demand shocks push the economy in the right direction. The Bank of Canada is likely to make a lot of mistakes when trying to adjust to aggregate demand shocks.

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter36: Six Debates Over Macroeconomic Policy
Section: Chapter Questions
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8. Challenges for monetary policy The following graph shows the aggregate demand (AD) and aggregate supply (AS) curves for a hypothetical economy. Initially, the economy is operating at its full-employment level. Use the graph to help you answer the questions that follow. You can drag the curves on the graph to help you answer the questions, but you will not be scored on any changes you make to the graph. Suppose that the government increases its purchases without changing the tax rate. PRICE LEVEL 300 275 250 225 200 175 150 125 100 76 50 25 0 012 Supply 9 3 456 7 8 REAL GDP (Billions of dollars) 10 11 12 Demand 9 Supply @
Transcribed Image Text:8. Challenges for monetary policy The following graph shows the aggregate demand (AD) and aggregate supply (AS) curves for a hypothetical economy. Initially, the economy is operating at its full-employment level. Use the graph to help you answer the questions that follow. You can drag the curves on the graph to help you answer the questions, but you will not be scored on any changes you make to the graph. Suppose that the government increases its purchases without changing the tax rate. PRICE LEVEL 300 275 250 225 200 175 150 125 100 76 50 25 0 012 Supply 9 3 456 7 8 REAL GDP (Billions of dollars) 10 11 12 Demand 9 Supply @
In the short run, the price level will be be 150, and real GDP will be 100, and real gross domestic product (GDP) will be $6 billion. curve. $4 billion. In the long run, the price level will Assume that the economy is still in short-run equilibrium following the increase in government purchases. In order to bring the economy back to its full-employment level, the central bank can increase the money supply, which leads to a shift in the aggregate demand Why is it difficult for the Bank of Canada to shift the aggregate demand curve precisely? Check all that apply. The Bank of Canada does not lend to banks and financial institutions. Data about the state of the economy are not available in real time. The Bank of Canada does not fully control the money supply. Economists debate whether monetary policy should be made by discretion or implemented according to a set of rules. with which of the following statements are advocates of discretion likely to agree? The Bank of Canada should not try to adjust to every aggregate demand shock. On average, the Bank of Canada's adjustments to aggregate demand shocks push the economy in the right direction. O The Bank of Canada is likely to make a lot of mistakes when trying to adjust to aggregate demand shocks.
Transcribed Image Text:In the short run, the price level will be be 150, and real GDP will be 100, and real gross domestic product (GDP) will be $6 billion. curve. $4 billion. In the long run, the price level will Assume that the economy is still in short-run equilibrium following the increase in government purchases. In order to bring the economy back to its full-employment level, the central bank can increase the money supply, which leads to a shift in the aggregate demand Why is it difficult for the Bank of Canada to shift the aggregate demand curve precisely? Check all that apply. The Bank of Canada does not lend to banks and financial institutions. Data about the state of the economy are not available in real time. The Bank of Canada does not fully control the money supply. Economists debate whether monetary policy should be made by discretion or implemented according to a set of rules. with which of the following statements are advocates of discretion likely to agree? The Bank of Canada should not try to adjust to every aggregate demand shock. On average, the Bank of Canada's adjustments to aggregate demand shocks push the economy in the right direction. O The Bank of Canada is likely to make a lot of mistakes when trying to adjust to aggregate demand shocks.
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