Question: PRACTICE PROBLEM: Negative AD shock Consider a decrease in consumer confidence: C Use the AD/AS model to derive the effects on output (Y ), employment

PRACTICE PROBLEM: Negative AD shock Consider a decrease in consumer confidence: C Use the AD/AS model to derive the effects on output (Y ), employment (N ) and unemployment (u); and the price level (P ). Make sure you distinguish between short-run and long-run effects. Suppose you are also interested in the interest rate (r ) effects. How would you derive these

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