ECON105week12questions - to the long-run? QUESTION 2...

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QUESTION 1 Assume the economy is initially at potential. Then there is a rise in business confidence, as firms feel optimistic about the future. (a) Show what happens immediately using an OUTPUT graph. (b) Show what happens in the short-run using an FC graph. (c) What long-run option will increase the (flexible) exchange rate, from the short-run
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Unformatted text preview: to the long-run? QUESTION 2 Consider the economy's long-run options if it is currently in a recessionary gap. For each option, what can the central bank do in the FC market, if it wants to keep (fix) the old exchange rate? ECON105 week 12 questions Eldar Sehic SFU 2010-1...
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This note was uploaded on 07/13/2010 for the course WFSC XDVBCX taught by Professor Sgfdb during the Spring '10 term at Simon Fraser.

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