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Unformatted text preview: 53: change interest rate today affect output next year and inflations two years from now-Typically adjust price when new line is introduced-Always worry about competition 55: peak effect realized almost after 2 years inflation effect1-3 years, total effect realized after 3 years 59: B) shift fallen output back a year C) inflation took two years to get to same as before 63: policy cannot change peoples behavior quicklytime lags= very influential 64: expenditure shock has no long run effect but there is volatility 68: monetary policy generally what we rely on to offset expenditure shocks-Inside lag: one need to consider the most 71: outside lag for spending part= longer than expected...
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- Spring '08
- Monetary Policy