Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please refer to the pic below. Thank you! The following table presents the macro-economic data of a country in 2018 and 2019 respectively. 2018 2019

Please refer to the pic below. Thank you!

image text in transcribed
The following table presents the macro-economic data of a country in 2018 and 2019 respectively. 2018 2019 Price level 110 105 Real GDP $ 1000 $800 Potential Real GDP $1000 $1200 (a) (5 points) Based on the LRAS-SRAS-AD model, propose factor (s) that must have changed to induce the change of the macro-variables from 2018 to 2019 stated in the table above. For each factor, you should state the factor clearly, whether it increases or decreases and which curve (LRAS, SRAS, AD) will shift and the direction of the shift of the curve. (b) (5 points) In 2019, propose a macro-economic policy that can raise the real GDP of the country to its long-run potential level (i.e., $1200). State clearly the policy, which curve (LRAS, SRAS, AD) will shift and the direction of the shift. Explain carefully how the policy you propose will lead to the shift of the curve(s) in the direction you have stated

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Strategic Management And Business Policy Toward Global Sustainability

Authors: Thomas L. Wheelen, J. David Hunger

13th Edition

9780132998079, 132998076, 978-0132153225

Students also viewed these Economics questions