13. Using an AS/AD diagram, illustrate the effects of an aggregate supply shock.What happens in the short run to:Output?Unemployment?Price level?Explain how the economy returns to the long run level of output.What happens in the long run, if the economy self adjusts, to: Output?Unemployment?Price level?What policies could the government use to stabilize the economy?How would these policies work?What happens in the long run, if the government uses policy, to: Output?Unemployment?Price level?

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Answered: 13. Using an AS/AD diagram, illustrate…

13. Using an AS/AD diagram, illustrate the effects of an aggregate supply shock. What happens in the short run to: Output? Unemployment? Price level?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

13. Using an AS/AD diagram, illustrate the effects of an aggregate supply shock.
What happens in the short run to:
Output?
Unemployment?
Price level?
Explain how the economy returns to the long run level of output.
What happens in the long run, if the economy self adjusts, to: Output?
Unemployment?
Price level?
What policies could the government use to stabilize the economy?
How would these policies work?
What happens in the long run, if the government uses policy, to: Output?
Unemployment?
Price level?

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