Scenario 4 US was at macro equilibrium and fullemployment Qf

Scenario #4 U.S. was at macro equilibrium and full-employment Qf and P1. U.S. citizens are optimistic about the future and have expectations of higher future incomes. (increase or decrease e g, unemployment inflation, slow growth) ·Which way will aggregate demand move? What macro economic problem arises-....l and get . The fed must (increase or decrease) the discount rate to fix these macro problem(s) and get aggregate demand back to Full-Employment.

Solution

The aggregate demand will increase as there are higher expectations of future income.

There will be inflation if aggregate demand grows faster.

The Fed must increase the discount rate to fix such problems.