Draw a graph of the ADAS model. Label the curves and axes carefully. Then show the effects
Question:
a. a positive demand shock
b. a positive supply shock How are the effects of these changes on the output gap different from the effects on inflation? If you observed an increase in real GDP so the output gap moved above zero, how could you tell whether AD or AS had shifted?
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6 An increase in AD increases inflation and real GD...View the full answer
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Related Book For
Macroeconomics
ISBN: 9780132109994
1st Edition
Authors: Glenn Hubbard, Anthony Patrick O'Brien, Matthew P Rafferty
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