https://courses.aplia.com/problemsetassets/macro/Fuller_Katrina/article.htmlYou’ve considered two different economic shocks resulting from Katrina:An aggregate supply shock: Katrina increased energy prices and temporarily reduced U.S.productive capacity.An aggregate demand shock: Government responded to the hurricane with massive expenditures on aid and rebuilding. Use AD-AS diagram to consider what the aggregate supply and aggregate demand model predicts about the combined economic impact of these two shocks. What does the aggregate supply and aggregate demand model predict about the combined impact of these shocks on the U.S. economy?What happens to the price levelWhat happens to output levelWhat happens to the unemployment rate

As a result of the increase in the energy prices there will be a rise in the cost of production…

Answered: You’ve considered two different…

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

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

Chapter10: Dynamic Change, Economic Fluctuations, And The Ad-as Model

Section: Chapter Questions

Problem 1CQ

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https://courses.aplia.com/problemsetassets/macro/Fuller_Katrina/article.html

You’ve considered two different economic shocks resulting from Katrina:

An aggregate supply shock: Katrina increased energy prices and temporarily reduced U.S.

productive capacity.

An aggregate demand shock: Government responded to the hurricane with massive expenditures on aid and rebuilding.

Use AD-AS diagram to consider what the aggregate supply and aggregate demand model predicts about the combined economic impact of these two shocks. What does the aggregate supply and aggregate demand model predict about the combined impact of these shocks on the U.S. economy?

What happens to the price level

What happens to output level

What happens to the unemployment rate

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