Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must showdirectional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer. (b) The central bank and the government do not take any policy actions to close the output gap.(i) Explain how the economy will adjust to full employment in the long run.(ii) On your graph in part (a), show how the economy adjusts to full employment in the long run.

Note: The above picture doesn't contain question a.So the part(ii) of question b could not be…

(b) The central bank and the government do not take any policy actions to close the output gap. (i) Explain how the economy will adjust to full employment in the long run. (ii) On your graph in part (a), show how the economy adjusts to full employment in the long run.

(b) The central bank and the government do not take any policy actions to close the output gap. (i) Explain how the economy will adjust to full employment in the long run. (ii) On your graph in part (a), show how the economy adjusts to full employment in the long run.

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

Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show
directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer.

(b) The central bank and the government do not take any policy actions to close the output gap.
(i) Explain how the economy will adjust to full employment in the long run.
(ii) On your graph in part (a), show how the economy adjusts to full employment in the long run.

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