Assume that a country s economy is currently in recession a

Last updated: 3/30/2023

Assume that a country s economy is currently in recession a Draw a correctly labeled graph of the long run and short run Phillips curves Label the current equilibrium as point Z b Assume the banking system has limited reserves banks in the country hold no excess reserves and the public s holding of currency is constant The required reserve ratio is 25 The central bank of the country buys 100 billion in bonds from the nonbank public 1 By how much will the monetary base of the country change 1 Calculate the change in the amount of loans in the banking system in the country Show your work I Calculate the change in the money supply in the country Show your work c Draw a correctly labeled graph of the money market and show the effect of the change in the money supply identified in part b iii on the nominal interest rate D d Assume there is no change in inflationary expectations On your graph in part a label a point W that is consistent with the effect of the change in the nominal interest rate identified in part c