Question
Can you please assist me with these questions with detailed explanations Thank you kindly 1.Suppose that, in an economy initially at full-employment, the central bank
Can you please assist me with these questions with detailed explanations Thank you kindly
1.Suppose that, in an economy initially at full-employment, the central bank increases the money supply.
a)How will this affect output and unemployment in the short run?
b)How will this affect output and unemployment in the long run?
c)Use an AS-AD graph to show the transition from the short run to the long run.
2. Suppose that an economy initially at full-employment is hit by an adverse supply shock.
a)What will happen to output and the price level in the short run?
b)What will happen to output and the price level in the long run?
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