New York University ECON-SHU ECON-SHU MG608 suppose an economy is experiencing higher inflation rates as well as a recessionary gap and the central bank increases increases interest rates.

New York University ECON-SHU ECON-SHU MG608 suppose an economy is experiencing higher inflation rates as well as a recessionary gap and the central bank increases increases interest rates.

-suppose an economy is experiencing higher inflation rates

as well as a recessionary gap and the central bank increases increases interest rates. carefully explain the effect of this monetary policy setting on short run GDP, inflation and unemployment, using the AD-AS model.
-Explain the effect of an increase in investment on equilibrium output and inflation in the short run and the long run. Would this affect the potential output? Why/ why not?
-suppose labour force in country a increases from 100 in 2017 to 200 in 2018. Explain the effect of this increases on real GDP, real GDP per capital and average labour productivity.

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