Suppose an economy experiences an increase in exports. a. Using the Aggregate Demand- Aggregate Supply model, explain the effect of this increase in the short run. b. What can the policy-makers do to address this shock and why should policymakers take any action? Would you choose a fiscal policy or a monetary policy? Why? With diagrams

Suppose an economy experiences an increase in exports. a. Using the Aggregate Demand- Aggregate Supply model, explain the effect of this increase in the short run. b. What can the policy-makers do to address this shock and why should policymakers take any action? Would you choose a fiscal policy or a monetary policy? Why? With diagrams

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter12: Fiscal Policy, Incentives, And Secondary Effects

Section: Chapter Questions

Problem 8CQ

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