Question
Suppose a permanent increase in oil prices causes an adverse shift in the short-run aggregate supply and reduces potential output at the same time. a.Suggest
Suppose a permanent increase in oil prices causes an adverse shift in the short-run aggregate supply and reduces potential output at the same time.
a.Suggest a reason why potential output can be affected by this change in production cost.
b.What are the effects on output and price level in the short run? What can the central bank do if price stability is the only policy goal?
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Economics of Strategy
Authors: David Besanko, David Dranove, Mark Shanley, Scott Schaefer
6th edition
978-1118273630, 111827363X, 978-1118319185
