Suppose that the production function for Costa Rica can be represented as: Y = F (K, L) = 7.5K0.5EL0.5 Assume the rate of growth of the population is 15%, the saving rate is s = 0.1, the technology growth of 7% and the depreciation rate is 8%. Throughout much of the 1990s, the world has experienced declining energy prices.

Assume that the world economy was in long-run equilibrium before these declines began. Use the aggregate demand-aggregate supply model to clearly illustrate the short-run AND long-run impact of this decline on output and prices