Question: The 2 models you have used have different underlying assumptions. Outline the major underlying difference(s) between the two models.(AD-AS and AE model) Briefly discuss and

The 2 models you have used have different underlying assumptions.

  • Outline the major underlying difference(s) between the two models.(AD-AS and AE model)
  • Briefly discuss and illustrate how thehow the difference(s) in the model assumptions impact the degreeof the potential impact on the economy. Use the AD-AS Model and provideONEdiagram to illustrate the potential difference in outcomes depending on the assumptions made. (Hint - consider the assumptions underlying the AE model - what SRAS curve reflects this?)

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