Consider a closed economy described by a Keynesian model with labour contract and nominal wage rigidity...
Consider a closed economy described by a Keynesian model with labour contract and nominal wage rigidity . The economy is originally in a general equilibrium. Let's now consider an unexpected monetary expansion.
Please simply answer what happen to employment (N) and the real interest rate (r) in the short-run equilibrium, and what happen to price (P) in the long run.
Homework Answers
In case of monetary expansion for closed economy, consumption will rise because of additional supply of money and will cause real interest rate to decrease because of easy availability of funds. Price in the long run will have inflationary pressure because of higher consumption and supply of cheap money.
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Consider a closed economy described by a Keynesian model with
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Please make sure to answer all parts, previous expert answers have not and it's really confusing!!...
Please make sure to answer all parts, previous expert
answers have not and it's really confusing!!
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Please make sure to answer all parts, previous expert
answers have not and it's really confusing!!
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