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The economy is in recession (output level is less than permanent level) because of a negative shock on demand. Policymakers decide to stabilize economic activity.
The economy is in recession (output level is less than permanent level) because of a negative shock on demand. Policymakers decide to stabilize economic activity.
- What policy will be conducted? (1)
- What is the transmission mechanism? (Hint: in order to change output, what items should be changed) (2)
- Use the AS-AD graph to demonstrate the effect of policy when the transmission mechanism works normally, and when the transmission mechanism is weak. (2)
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Macroeconomics
Authors: Charles I. Jones
4th Edition
393603767, 393603768, 9780393616125 , 978-0393603767
