Qstion - we know that the as curve is p p e 05y

Economics

Question - We know that the AS curve is p = p e + 0.5(Y - Y * ) that is ?(how inflation responds to output gap) = 0.5, (price shock) = 0.
Moreover we know:

• expected inflation = p e = 4.5

• potential output = Y * = 7 trillion

Aggregate demand curve= YAD= 14.8 trillion

(a) What is the short-run equilibrium level of output (Y)?

(b) What is the short-run equilibrium level of inflation (p)?

(d) What is the long-run equilibrium level of inflation (p)?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M93123249

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