Saudi Electronic University Equilibrium Price Question

Case Study:1(5 Points)

Please read the case “Money and Prices during Four Hyperinflations” from Chapter 17 “Money Growth and Inflation” Page: – 652 – Chapter 30 given in your textbook –“Principles of Macroeconomics”.The case study presented in the chapter discussed the government can pay for some of its spending simply by printing money. When countries rely heavily on this “inflation tax,” the result is hyperinflation. and Answer the following Questions:

Questions: 

1.1. Suppose a country’s inflation rate increases sharply. What happens to the inflation tax on the holders of the money? Why is wealth that is held in savings accounts not subject to a change in the inflation tax? Can you think of any way holders of savings accounts are hurt by the increase in the inflation rate? (2.5 points)  

1.2. It is sometimes suggested that the Federal Reserve should try to achieve zero inflation. If we assume that velocity is constant, does this zero-inflation goal require that the rate of money growth equal zero? If yes, explain why? If no, explain what the rate of money growth should equal? (2.5 points)   

Important Note: – Support your submission with course material concepts, principles, and theories from the textbook and at least two scholarly, peer-reviewed journal articles.

Case Study:2 (5 Points)

Please read the case “Oil and the Economy” from Chapter 20 “Aggregate Demand and Aggregate Supply” Page: – 750 – Chapter 33 given in your textbook –“Principles of Macroeconomics”. A case study discussesthe model of aggregate demand and aggregate supply explains the economic fluctuations.

Questions: 

2.1. Explain the short-run and long-run impacts of oil price increase on output and price level in the U.S. during 1973-1975 periods using the model of aggregate demand and aggregate supply. (2.5 points)  

2.2. Explain the short-run and long-run impacts of oil price fall on output and price level in the U.S. in 1986, using the model of aggregate demand and aggregate supply (2.5 points)