Analyze the short-run economic implications of the policy. This analysis should include the… 1 answer below »

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The subject I choose is : “Causes of German hyperinflation (1920s)”

  1. 1.Analyze the short-run economic implications of the policy. This analysis should include the following:

    1. a.The effects of the policy on the economy shown graphically using the IS-LMModel. Did the IS curve or the LM curve shift? What happens to interest rates and income/output? Explain your reasoning.

      1. If the policy causes a shift in theIScurve, draw three graphs (Keynesian Cross, Investment Function andIScurve) to illustrate the effects of the policy. Explain what occurs in each graph to justify your reasoning.

      2. If the policy causes a shift in theLMcurve, draw two graphs (The Market for Real Money Balances andLMcurve) to illustrate the effects of the policy. Explain your reasoning.

    2. b. Show the effects of the policy using the AD-ASModel. What happens to the level of income and the price level in the short run and the long-run? Be sure toillustrate and explain the equilibrium prior to and after the policy’simplementation. For example, if the economy is in a recession prior to the enaction of the policy, clearly show this in your graph. Explain, using words what is happening in the model and why.

  1. 2.Briefly analyze the long-run implications of the enacted policy by drawing upon your understanding of the Solow Growth Model. Also keep in mind the crucial role that national savings plays in the development of physical capital and how this could spur on or inhibit economic growth. Think about how your policy may potentially impact the government budget and/or how changes in interest rates may impact investment in new capital. Do you expect there to be change in the rate or saving, population growth or technological progress? If so, what are the long-run effects.

  2. 3.Compare and contrast the short-run and long-run impacts. What trade-offs did this economy have to make? Do you think this is a good or bad economic policy? If you thinkit’s a bad policy, think about why policymakers may have still enacted it.

  3. 4.The use of data is encouraged, but not required. Data can help to support your claims regarding the proposed impacts of your proposed policies. It can also help to illustrate the shortcomings of the model by showing what it got wrong.

  4. 5.The project should be approximately 5 pages in length (including graphs). All text should be double spaced and organized appropriately. Your grammar and your written communication skills will be considered.

  5. 6.If you use any sources or data, you must cite them appropriately. Academic dishonesty or plagiarism will not be tolerated.


  1. Introduction & Identification of Macroeconomic Policy

  2. Short-Run Analysis

    1. IS-LMModel

    2. IScurve orLMcurve analysis

    3. AD-ASAnalysis

  3. Analysis of potential long-run impacts of the policy.

  4. Short-Run vs. Long-Run Tradeoff

  5. Concluding Remarks


All graphs should meet the following standards:

  • Each graph should be Titled & Numbered

  • All graphs must be embedded in their appropriate sections

  • Clearly labeled X-axis and Y-axis

  • Clearly labeled curves and equilibrium points

  • Clear illustration of the enacting policy and transition between equilibrium points.

  • These graphs may be drawn by hand but must be legible and embedded in your paper.

  • Each graph should take up no more than one third of a page.

tthis is supposed to be an examination of a macroeconomic policy.

As such, you need to focus on examining the policies that lead to the German hyperinflation during the 1920s.

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