An economy’s relationship between short-run equilibrium output and inflation (its aggregate demand curve) is described by the equation: y = 13,000 – 20,000π. initially, the inflation rate is 4 percent, or π = 0.04. potential output y* equals 12,000.

a. the short-run equilibrium output .
b. the rate of inflation at the long-run equilibrium is

(a) 12,200

(b) 5%

Explanation:

(a)  Y = 13,000 - 20,000 (.04)

Y = 13,000 - 800

Y = 12,200

Therefore, the short run equilibrium output is  12,200.

(b) Y = 13,000 - 20,000π

Substituting the value of y* by 12,000

12,000 = 13,000 - 20,000π

20,000π = 13,000 - 12,000

π = (1,000 ÷ 20,000 ) × 100

π = 0.05 or 5 %

Therefore, the rate of inflation at the long-run equilibrium is 5%.

muslims control the north africa during the period of 1500 up

to 1800. they made a barrier to prevent further european exploration from

entering the africa from the north. however, the dutch ware still able to move

toward the interior with having south africa as one of the routes leading to

the east for trading with asia.