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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Name two macroeconomic variables that decline when the economy goes into a recession. Name one macroeconomic variable that rises during a recession.

To determine

The macroeconomic variables that would decline during recession and one variable that would rise during recession.

Explanation

During the period of a recession, the economy will face the leftward shift in the Aggregate Demand and Aggregate Supply of the economy. When the AD and AS shifts leftwards, it would lead to the new equilibrium where the equilibrium output will be lower whereas the price level will be higher. Thus, during the period of recession in the economy, the real GDP of the economy and the investm...

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