Describe what is happening in each of the following three graphs. Assume that the initial change (from
Question:
Describe what is happening in each of the following three graphs.
Assume that the initial change (from Point A to Point B) is caused by a shift in the aggregate demand or aggregate supply curve, and then the economy’s self-correcting mechanism operates from Point B to Point C. For each panel, identify
(a) which curve is shifting (AS or AD), (b)
how and why it is shifting, and
(c) how the economy gets back to full employment.
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Panel A From Point A to Point B due to the AD curve shifting right From B to C costpush inf...View the full answer
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