QUESTION 4 Using a classical model of the economy, explain the effect of the following on (1) aggregate demand; (ii) short run aggregate supply: (iii) output and prices in the long run. (a) A 10 per cent rise in earnings. (b) An increase in real spending by government on education and training. (c) An increase in the average long term real rate of interest from 3 per cent to 5 per cent.

QUESTION 4 Using a classical model of the economy, explain the effect of the following on (1) aggregate demand; (ii) short run aggregate supply: (iii) output and prices in the long run. (a) A 10 per cent rise in earnings. (b) An increase in real spending by government on education and training. (c) An increase in the average long term real rate of interest from 3 per cent to 5 per cent.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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