Suppose some friends you made on an international trip are thinking of moving to the United States. The number of immigrants living in the United States rose 16 percent in recent years (Census Bureau). At the same time, the U.S. population over 65 is increasing much faster than the percentage of the population under age 20. Use the model of AD-AS to explain the impact of (i) increased immigration and (ii) the aging of America on the economy (hint: what is shifting and in what direction? Also, it’s OK if there is no clear-cut prediction on the equilibrium outcome).

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i Increased immigration means there is higher level of labor supply ... View the full answer