According to the monetarist/ new classical view... Why will the economy ways return back to full employment of output n the long run , despite the short term fluctuations n output ?

What terms can be defined for this question?

how would you use a diagram o illustrate his concept ?

What needs to be explained?

What real world examples can you use to support this?

The Greek economy still Applying your skills shrinking 1 How do low consumer and business confidence influence aggregate demand? The Greek economy is expected to contract by 4.8% in 2010. The contraction is mainly due to decreases in consumer and 2 Using a short-run AD-AS diagram, show the private investment spending, as net exports are showing an effects on aggregate demand of (a) falling improvement. The forecast for 2011 is that the economy consumer, investment and government will contract a further 3.6%, partly due to drastic cuts in spending, (b) improved net exports, and (c) government spending, together with increases in indirect increased indirect taxes and business taxes. taxes and corporate (business) taxes. Consumer and business confidence are very low. Consumer spending will continue 3 Using information in the extract, state two to decrease as unemployment rises and real wages fall. reasons explaining the falls in (a) consumer Investment spending is also forecast to fall further. spending, and (b) investment spending. Source: Economist Intelligence Unit, ViewsWire News Analysis, 4 Using an AD-AS diagram, explain what kind of 15 November 2010. output gap the Greek economy is experiencing