Compare the effects of a change in money supply and technology in a model with fully sticky prices and partially sticky prices. Describe the dynamics that makes the model move from a short run equilibrium to a long run equilibrium. How would your answers be different if the model had perfectly flexible prices. Why short run equilibrium output level is not efficient? Give proper economic reasoning.

Compare the effects of a change in money supply and technology in a model with fully sticky prices and partially sticky prices. Describe the dynamics that makes the model move from a short run equilibrium to a long run equilibrium. How would your answers be different if the model had perfectly flexible prices. Why short run equilibrium output level is not efficient? Give proper economic reasoning.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter14: Aggregate Demand And Supply

Section14.A: The Self Correcting Aggregate Demand And Supply Model

Problem 4SQP

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