Question
Aggregate Demand and Supply [5marks] (a) Derive the AD curve from IS-LM or Hicks-Hansen model. Explain in words.[3 marks] (b)Show using the AD-SRAS-LRAS curves what
Aggregate Demand and Supply [5marks]
(a) Derive the AD curve from IS-LM or Hicks-Hansen model. Explain in words.[3 marks]
(b)Show using the AD-SRAS-LRAS curves what happens to real interest rate, output and prices inthe short-run and the long-run if there is atemporary increase in government purchases for military purposes. Will it matter whether the temporary increase in military spending is funded by taxes or by borrowing?[2 marks]
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Macroeconomics Principles Applications And Tools
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
7th Edition
978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234
