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Use the (Keynesian) AD-AS model to answer the following questions. Draw the effects of a recession caused by a decrease in aggregate demand. For simplicity,
- Use the (Keynesian) AD-AS model to answer the following questions.
- Draw the effects of a recession caused by a decrease in aggregate demand. For simplicity, assume that your economy starts at general equilibrium. Label your graph carefully.
- Assume you are the chairman of the Fed. What are your two options? When would each policy be the optimal policy?
- Draw the effects of both of these options and explain in words.
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In the Keynesian ADAS model the aggregate demand AD curve represents the total spending in an economy at different price levels while the aggregate su...
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Macroeconomics Principles Applications And Tools
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
7th Edition
978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234
