In a small open economy, is a negative supply shock or a negative demand shock more damaging for medium-run output? Explain in words and use AD-EDU diagrams to back up your argument. Describe the effects on the real wage, unemployment and the real exchange rate in medium-run equilibrium of an increase in unemployment benefits.

In a small open economy, is a negative supply shock or a negative demand shock more damaging for medium-run output? Explain in words and use AD-EDU diagrams to back up your argument. Describe the effects on the real wage, unemployment and the real exchange rate in medium-run equilibrium of an increase in unemployment benefits.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter31: Open-Economy Macroeconomics: Basic Concepts

Section31.2: The Price For International transaction: Real And Nominal Exchange Rate

Problem 2QQ

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