Question
Use the AS-AD and IS-LM graphs to illustrate the changes in the short-run equilibrium and the medium-run equilibrium. Suppose the economy is initially operating at
Use the AS-AD and IS-LM graphs to illustrate the changes in the short-run equilibrium and the medium-run equilibrium. Suppose the economy is initially operating at Yn (full-employment GDP). Now suppose government spending (G) increases.
- What are the initial (short run) effects of the increase in G on P, M/P, i, I and Y? Show on the graphs.
- When Y is greater than Yn, what would happen to the AS and LM curves? Show on the graphs and explain.
- What are the medium-run effects of the increase in G on P, M/P, i, I and Y?
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What Environmentalists Need To Know About Economics
Authors: Jason Scorse
1st Edition
0230107311, 9780230107311
