Describe the long run impact on inflation and output

Reference no: EM131223435

Use the aggregate demand-aggregate supply framework to show how a boom in equity prices might affect inflation and output in the short run.

Describe the long-run impact on inflation and output

(a) if the central bank implicitly allows its inflation target to rise and

(b) if it retains its original inflation target.

Reference no: EM131223435

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