For each of the following events, explain the short-run and long-run effects on output and the price
Question:
For each of the following events, explain the short-run and long-run effects on output and the price level, assuming policymakers take no action.
a. The stock market declines sharply, reducing consumers’ wealth.
b. The federal government increases spending on national defense.
c. A technological improvement raises productivity.
d. A recession overseas causes foreigners to buy fewer U.S. goods.
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a When the stock market declines sharply wealth declines so the aggregatedemand curve shifts to the ...View the full answer
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