Answer to Question #47872 in Macroeconomics for Sarah
1- An economy is starting to exhibit signs of an economic boom. The central bank decides to change monetary policy to deal with an economic boom, describe in point form what will occur to the monetary policy, (MP), the real interest rate, and to the aggregate demand curve?
2- Contrast your answer above if the central bank was pursing an inflation control target of between 1 and 3%. Do you think the central bank will step in, why or why not?
2. If the central bank was pursing an inflation control target of between 1 and 3%, there will be no need for the central bank to step in, because during the economic boom inflation is controlled.
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