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An adverse supply shock (an increase in oil prices) occurs in a specific economy. The Central Bank decides to accommodate the shock through an increase
An adverse supply shock (an increase in oil prices) occurs in a specific economy. The Central Bank decides to accommodate the shock through an increase in money supply (expansionary monetary policy). What will happen to the price level, the interest rates level, the output (Y) level, the real wages, and the unemployment level in the short run and in the long run? (thorough explanation by analyzing the changes that happen on the AS-AD diagram and the adjustment processes that happen in the short run and the long-run).
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