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Expansionary monetary policy has been analyzed under various macroeconomic models.

During 2007-08, the Federal Reserve adopted an expansionary monetary policy by lowering the federal funds rate target from 5.25% on 9/17/07 to effectively zero on 12/16/08.

a. According to the Lucas's Monetary Misperceptions Model, what would be the impact of this anticipated expansionary monetary policy on output and inflation? describe briefly.

b. According to the Taylor's Relative-Price Theory, what would be the impact of this anticipated expansionary monetary policy on output and inflation? describe briefly.

c. According to the Fischer's Sticky-Wage Theory, what would be the impact of this anticipated expansionary monetary policy on output and inflation? describe briefly.

d. According to the Real Business Cycle model, what would be the impact of this anticipated expansionary monetary policy on output and inflation? describe briefly.

e. According to the New Neoclassical Synthesis model, illustrate what would be the impact of this anticipated expansionary monetary policy on output and inflation? describe briefly.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M922716

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