Question 4 Suppose the U.S. economy can be described by an IS Curve with b = 1/6. In addition, assume that United States is currently at its trend level of potential output. All economies are open. Now suppose Europe enters into a recession and demands less from the U.S. The share of U.S. exports relative to potential U.S. output drops by 1.5 percentage point. Based on this information you know that short-run output in the U.S. is percent.

Question 4 Suppose the U.S. economy can be described by an IS Curve with b = 1/6. In addition, assume that United States is currently at its trend level of potential output. All economies are open. Now suppose Europe enters into a recession and demands less from the U.S. The share of U.S. exports relative to potential U.S. output drops by 1.5 percentage point. Based on this information you know that short-run output in the U.S. is percent.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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