We know that the as curve is p p e 05y - y that is how, Microeconomics

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We know that the as curve is p p e 05y - y that is how

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: We know that the as curve is p p e 05y - y that is how

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