Suppose the economy is in a situation of moderate unemployment, and then an exogenous increase of aggregate demand occurs. (Assume the aggregate demand schedule follows the pattern set out by the mainstream story.) Use short run aggregate supply and aggregate demand analysis to discuss in detail the effects of this demand change on the price level and real GDP in the short run. Explain how the situation could change in the long run after the happenings in the first part.
Suppose the economy is in a situation of moderate unemployment, and then an exogenous increase of aggregate demand occurs. (Assume the aggregate demand schedule follows the pattern set out by the mainstream story.) Use short run aggregate supply and aggregate demand analysis to discuss in detail the effects of this demand change on the price level and real GDP in the short run. Explain how the situation could change in the long run after the happenings in the first part.
Chapter22: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 5P
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- Suppose the economy is in a situation of moderate
unemployment , and then an exogenous increase of aggregatedemand occurs. (Assume the aggregate demand schedule follows the pattern set out by the mainstream story.) Use short runaggregate supply and aggregate demand analysis to discuss in detail the effects of this demand change on the price level and realGDP in the short run. Explain how the situation could change in the long run after the happenings in the first part.
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