For each of the following events, explain the short-run and long-run effects on output and the price level, assuming policymakers take no action. The stock market declines sharply, reducing consumers’ wealth. The federal government increases spending on national defense. A technological improvement raises productivity. A recession overseas causes foreigners to buy fewer U.S. goods.
For each of the following events, explain the short-run and long-run effects on output and the price level, assuming policymakers take no action. The stock market declines sharply, reducing consumers’ wealth. The federal government increases spending on national defense. A technological improvement raises productivity. A recession overseas causes foreigners to buy fewer U.S. goods.
Chapter20: Aggregate Demand And Supply
Section20.A: The Self Correcting Aggregate Demand And Supply Model
Problem 5SQ
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Question
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For each of the following events, explain the short-run and long-run effects on output and the price level, assuming policymakers take no action.
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The stock market declines sharply, reducing consumers’ wealth.
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The federal government increases spending on national defense.
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A technological improvement raises productivity.
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A recession overseas causes foreigners to buy fewer
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U.S. goods.
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