Classify each of the following as a supply shock or ademand shock. Use a graph to show the effects on inflation and output in the short run and in the long run.a. Financial frictions increase.b. Households and firms become more optimistic aboutthe economy.c. Favorable weather produces a record crop of wheatand corn in the Midwest.d. Auto workers go on strike for four months.
Classify each of the following as a supply shock or ademand shock. Use a graph to show the effects on inflation and output in the short run and in the long run.a. Financial frictions increase.b. Households and firms become more optimistic aboutthe economy.c. Favorable weather produces a record crop of wheatand corn in the Midwest.d. Auto workers go on strike for four months.
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter15: Aggregate Demand And Aggregate Supply
Section15.2: Explaining Short-run Economic Fluctuations
Problem 2QQ
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Classify each of the following as a supply shock or a
demand shock. Use a graph to show the effects on inflation and output in the short run and in the long run.
a. Financial frictions increase.
b. Households and firms become more optimistic about
the economy.
c. Favorable weather produces a record crop of wheat
and corn in the Midwest.
d. Auto workers go on strike for four months.
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