2. Suppose that the economy is undergoing a recession because of a fall in aggregate demand. a....

Question:

2. Suppose that the economy is undergoing a recession because of a fall in aggregate demand.

a. Using an aggregate-demand/aggregate-supply diagram, depict the current state of the economy.

b. What is happening to the unemployment rate?

c. “Capacity utilization” is a measure of how intensively the capital stock is being used. In a recession, is capacity utilization above or below its long-run average? Explain.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: