Use the (Keynesian) AD-AS model to answer the following questions. Draw the effects of a recession caused
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Question:
- 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.
Related Book For
Macroeconomics Principles Applications And Tools
ISBN: 9780134089034
7th Edition
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
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