a. What increase in aggregate demand is necessary to achieve this? billions. b. If successful, what will be the growth rate? Round your answer below to 2 decimal places. 1% c. If successful, what will be the inflation rate? Round your answer below to 2 decimal places. %

MACROECONOMICS FOR TODAY
10th Edition
ISBN:9781337613057
Author:Tucker
Publisher:Tucker
Chapter17: The Philips Curve And Expetactions Theory
Section17.3: The Theory Of Rational Expectations
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The economy of Carlsberg is presently in equilibrium, but is suffering a recession as depicted in the graph below. The central bank of
Carlsberg is introducing an expansionary monetary policy to get the economy back to the full-employment level of real GDP.
Price index
160
140
120
100
80
80
7 2
AS
AD
LAS
60
370
380
390
400
410
420
Real GDP (in billions)
a. What increase in aggregate demand is necessary to achieve this?
EA
$
billions.
b. If successful, what will be the growth rate? Round your answer below to 2 decimal places.
%
c. If successful, what will be the inflation rate? Round your answer below to 2 decimal places.
%
Transcribed Image Text:The economy of Carlsberg is presently in equilibrium, but is suffering a recession as depicted in the graph below. The central bank of Carlsberg is introducing an expansionary monetary policy to get the economy back to the full-employment level of real GDP. Price index 160 140 120 100 80 80 7 2 AS AD LAS 60 370 380 390 400 410 420 Real GDP (in billions) a. What increase in aggregate demand is necessary to achieve this? EA $ billions. b. If successful, what will be the growth rate? Round your answer below to 2 decimal places. % c. If successful, what will be the inflation rate? Round your answer below to 2 decimal places. %
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