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Question 11 Please graphically demonstrate the effects on the level of prices and the value of money if consumers increase their spending due to stock
Question 11 Please graphically demonstrate the effects on the level of prices and the value of money if consumers increase their spending due to stock market boom and therefore make more transactions. On the other hand, the Fed decreases the money supply in the economy at the same time. Does the price level go up or down? Does the value of money go up or down? Question 12 Suppose the economy is in a long-run equilibrium (Label intersection point "A"). Please use the AD-AS model to explain the effects of the following market scenario graphically. Market scenario: Canada is a large purchaser of our export goods. Canada goes into recession, and Canadians' purchasing power decreases. 12.1 What happens to the aggregate output and price level in the short run? (Label intersection point "B"). 12.2 What happens to the aggregate output and price level in the long run without government intervention? (Label intersection point "C")
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