Q1: Consider the IS-LM model. Suppose the economy of Economica is initially at the general equilibrium. This year, the weather in Economica is extremely good. a. Explain and show graphically how a good weather shock affects the labor, goods, or the asset market. b. Explain and show graphically how a good weather shock affects the short-run equilibrium. c. Explain and show graphically how a good weather shock affects the general (long-run) equilibrium.
Q1: Consider the IS-LM model. Suppose the economy of Economica is initially at the general equilibrium. This year, the weather in Economica is extremely good. a. Explain and show graphically how a good weather shock affects the labor, goods, or the asset market. b. Explain and show graphically how a good weather shock affects the short-run equilibrium. c. Explain and show graphically how a good weather shock affects the general (long-run) equilibrium.
Chapter10: Aggregate Demand And Supply
Section10.A: The Self Correcting Aggregate Demand And Supply Model
Problem 10SQ
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Q1: Consider the IS-LM model. Suppose the economy of Economica is initially at the general equilibrium. This year, the weather in Economica is extremely good.
a. Explain and show graphically how a good weather shock affects the labor, goods, or the asset market.
b. Explain and show graphically how a good weather shock affects the short-run equilibrium.
c. Explain and show graphically how a good weather shock affects the general (long-run) equilibrium.
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