You have data for real output y, price level P, and the nominal wage W at two distant dates (time t = 0 and time t = 10) for three different economies: United Kingdom Date Price level t = 0 t = 10 Output y = 200 y = 190 P = 10 P = 10 Wage W = 50 W = 40 France Output y = 250 y = 250 Price level P = 15 P = 15 Wage W = 45 W = 45 Date t = 0 t = 10 Germany Date Output y = 220 y = 240 Price level t = 0 t = 10 P = 12 P = 12 Wage W = 40 W = 35 All these observations reflect potential equilibrium levels: each of the three economies was in a first potential equilibrium at time t= 0 and and is in a new potential equilibrium at time t = 10. You do not have any short-run data. wwww (3.B) Between time t= 0 and time t = 10, one of the three economies experienced a shock on productivity and a monetary intervention (a change in money supply). Can you identify this economy? Motivate your answer and try to speculate on a plausible reason for the monetary intervention.

You have data for real output y, price level P, and the nominal wage W at two distant dates (time t = 0 and time t = 10) for three different economies: United Kingdom Date Price level t = 0 t = 10 Output y = 200 y = 190 P = 10 P = 10 Wage W = 50 W = 40 France Output y = 250 y = 250 Price level P = 15 P = 15 Wage W = 45 W = 45 Date t = 0 t = 10 Germany Date Output y = 220 y = 240 Price level t = 0 t = 10 P = 12 P = 12 Wage W = 40 W = 35 All these observations reflect potential equilibrium levels: each of the three economies was in a first potential equilibrium at time t= 0 and and is in a new potential equilibrium at time t = 10. You do not have any short-run data. wwww (3.B) Between time t= 0 and time t = 10, one of the three economies experienced a shock on productivity and a monetary intervention (a change in money supply). Can you identify this economy? Motivate your answer and try to speculate on a plausible reason for the monetary intervention.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter8: Economic Fluctuations, Unemployment, And Inflation

Section: Chapter Questions

Problem 12CQ

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