Instead of reacting to the negative supply shock, policymakers choose not to respond and continue with their previous set of policies. a. Given enough time, what will occur in this economy? Input prices will decrease, SRAS increases back to a long-run equilibrium O Input prices will increase, SRAS decreases back to a long-run equilibrium Input prices will decrease, SRAS decreases back to a long-run equilibrium Input prices will increase, SRAS increases back to a long-run equilibrium b. What is the main critique regarding the approach of no intervention? 4 Self-correction never occurs. O In exceptional circumstances, self-correction may happen too fast. In exceptional circumstances, self-correction may be incredibly slow or may not occur. Intervention is always needed.

Instead of reacting to the negative supply shock, policymakers choose not to respond and continue with their previous set of policies. a. Given enough time, what will occur in this economy? Input prices will decrease, SRAS increases back to a long-run equilibrium O Input prices will increase, SRAS decreases back to a long-run equilibrium Input prices will decrease, SRAS decreases back to a long-run equilibrium Input prices will increase, SRAS increases back to a long-run equilibrium b. What is the main critique regarding the approach of no intervention? 4 Self-correction never occurs. O In exceptional circumstances, self-correction may happen too fast. In exceptional circumstances, self-correction may be incredibly slow or may not occur. Intervention is always needed.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 10SCQ: Many financial analysts and economists eagerly await the press releases for the reports on the home...

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