ECON 2035 Midterm: EXAM 3 Tests (got 94% in the course)
Document Summary
Exam #3: from the quantity equation of money, we can derive inflation as = % change in m + % change in v - % change in y. Neutrality: suppose the economy is producing at the potential level of output. Further assume that there is a substantial fall in stock prices. Everything else held constant, the fall is stock prices will cause real aggregate output to. Decrease in the short-run and the inflation rate to decrease in the short-run: the federal reserve has an explicit inflation target range of 2. 0-2. 5%. 7. e and the ex ante real interest rate is greater than the ex post real interest. Further assume that corn is a major ingredient in many types of food based intermediate goods used in production. Further assume that the is the provision that the fed give clear and detailed information about monetary policy country enters a severe recession.
