Question: Question in picture Consider the Dynamic Aggregate Demand/ Dynamic Aggregate Supply model shown in class. Recall that it is characterized by two equilibrium equations: the

Question in picture

Consider the Dynamic Aggregate Demand/ Dynamic Aggregate Supply model shown in class. Recall that it is characterized by two equilibrium equations: the dynamic aggregate demand (DAD) and dynamic aggregate supply (DAS). a. Derive the dynamic aggregate supply (DAS) equation. Your derivation should yield the expression below. (15 pts.) DAS x, = 7r:_1+(Y, 47.)\"), b. Suppose there is an unprecedented event that greatly limits suppliers in this economy. How sensitive is equilibrium output to this shock? (15 pts)

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