Consider the model of aggregate demand (AD) and supply in Chapter 10 of Mankiw 6e, which distinguishes between the long-run aggregate supply curve (LRAS) and short- run aggregate supply curve (SRAS). Using this model, analyze the impact of each scenario in the short run and in the long run by drawing the appropriate graph. Denote the initial equilibrium point as "A", the short-run equilibrium point as "B", and the new long-run equilibrium point as "C". Indicate through arrows the movement in equilibrium point from the short run to the long run. a. Implementation of lockdown policies which limited the mobility of people, thus causing consumers to spend less. b. Scenario (a) plus decline in labor force participation and widespread closure of businesses like in COVID-19 pandemic. c. Oil price hike which increases the costs of production. d. Scenario (c) plus government response in the form of accommodative monetary policy and fiscal stimulus to prevent the decline in output

Consider the model of aggregate demand (AD) and supply in Chapter 10 of Mankiw 6e, which distinguishes between the long-run aggregate supply curve (LRAS) and short- run aggregate supply curve (SRAS). Using this model, analyze the impact of each scenario in the short run and in the long run by drawing the appropriate graph. Denote the initial equilibrium point as "A", the short-run equilibrium point as "B", and the new long-run equilibrium point as "C". Indicate through arrows the movement in equilibrium point from the short run to the long run. a. Implementation of lockdown policies which limited the mobility of people, thus causing consumers to spend less. b. Scenario (a) plus decline in labor force participation and widespread closure of businesses like in COVID-19 pandemic. c. Oil price hike which increases the costs of production. d. Scenario (c) plus government response in the form of accommodative monetary policy and fiscal stimulus to prevent the decline in output

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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