a. Is a typical AD curve downward sloping? Explain your answer. b. Suppose an economy is at the short run equilibrium which its current output level called Y1, is below the full employment output level called Yf. Using a correctly labelled aggregate demand and aggregate supply graph to show each of the following for the economy. I) Full-employment output level II) Current output level III) Current price level called P1 c. To deal with the economic recession in part b, the central bank considers using monetary policy to bring the economy back to its long run equilibrium level of output. Draw a correctly labelled aggregate demand and aggregate supply graph to show the effect of the policy on the output level and the price level of the economy. Briefly explain your answer. d. If the government does nothing, discuss how the economy restores its long run equilibrium level of output in part b. Is your answer in part d. the same as that in part c.? Briefly explain your answer. answer c and d only. Because I have answered a and b already. Thankyou
a. Is a typical AD curve downward sloping? Explain your answer.
b. Suppose an economy is at the short run equilibrium which its current output level called Y1, is below the full employment output level called Yf. Using a correctly labelled aggregate demand and
I) Full-employment output level
II) Current output level
III) Current price level called P1
c. To deal with the economic recession in part b, the central bank considers using
answer.
d. If the government does nothing, discuss how the economy restores its long run equilibrium level of output in part b. Is your answer in part d. the same as that in part c.? Briefly explain your answer.
answer c and d only. Because I have answered a and b already. Thankyou
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