Business, 05.05.2020 14:47, bsimon0129

Because deflation is so costly, some have argued that setting an inflation target at 2 percent is too low and it should be set higher, to 3 percent, especially in the economic environment of 2007-2010. Consider the impact of such an increase in the inflation target using the AS/AD framework in the short and long runs. Begin your analysis in the long-run equilibrium." Between the third & fourth quarters of '06, the housing bubble burst in the United States. Using the AS/AD framework to discuss the impact of this macroeconomic event, begin and end in the long run.

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Because deflation is so costly, some have argued that setting an inflation target at 2 percent is to...