Classify each of the following as a supply shock or a demand shock. Use a graph to

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Classify each of the following as a supply shock or a demand shock. Use a graph to show the effects on inflation and output in the short run and in the long run.

a. Financial frictions increase.

b. Households and firms become more optimistic about the economy.

c. Favorable weather produces a record crop of wheat and corn in the Midwest.

d. Auto workers go on strike for four months.

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The Economics of Money Banking and Financial Markets

ISBN: 978-0133836790

11th edition

Authors: Frederic S. Mishkin

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Question Posted: Nov 03, 2017 04:08 AM

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Classify each of the following as a supply shock or a demand shock. Use a graph to

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a Negative demand shock An increase in financial frictions reduces aggregate demand Output and inf...View the full answer

The Economics of Money Banking and Financial Markets

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