Problem
1. What would be the effect of an increase in U.S. net exports on the aggregate demand curve? Would an increase in net exports affect the monetary policy curve? Explain why or why not.
2. Suppose that the U.S. economy does not recover from the 2007 contraction until 2012, when a new Fed chair is appointed. Suppose his or her approach to monetary policy can be summarized by the following statement: "I care only about increasing employment; inflation has been at very low levels for quite some time; my priority is to ease monetary policy to promote employment."
a) Would you expect the monetary policy curve to shift upwards or downwards?
b) What would be the effect on the aggregate demand curve?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.