Farmers in LA,California are dealing with more frequent droughts, floods, wildfires, and other natural events that inhibit
Question:
Farmers in LA,California are dealing with more frequent droughts, floods, wildfires, and other natural events that inhibit their production of food. Suppose that in one specific year, a severe drought in California substantially reduces the amount of food that farms are able to produce
Without any other shocks or any policy responses, what will happen in the short run to real GDP and prices in the US, what will be Real GDP and Price level , it increases, decreases or remain unchanged.
2.Suppose that the central bank wanted to respond to the short-run change, what should central bank do , will it lower rate, higher rate, do nothing. what would be effect on Real GDP and price level.
3. What if the climate changes persists in long run, what will happen to real GDP and price without any central bank intervention
Expert Answer:
1 In the short run the severe drought in California would likely lead to a decrease in real GDP and ... View the full answer
