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Explain Why Anticipated Policy Has Different Short-Run Effects on Real

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Essay

Explain why anticipated policy has different short-run effects on real output and the price level in the new classical,new Keynesian,and traditional models.What are the long-run effects of anticipated policy in each model?


Definitions:

CDOs

Collateralized Debt Obligations, a type of structured asset-backed security (ABS) with different tranches that can be impacted by mortgage, auto loan, and credit card debt defaults.

Rating Agencies

Companies that assess the financial strength of entities, like corporations and governmental bodies, and their ability to meet financial obligations, issuing ratings that reflect that assessment.

Valuation

A systematic process to determine the price at which a security should sell in financial markets.

Designated Market Maker

A designated market maker is a market participant responsible for maintaining liquidity in a financial market by buying and selling securities.

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