The aggregate demand aggregate supply model is a quite useful tool for us to understand the economy. So far, we saw only one change at a time, however, in reality, there can be multiple shocks at the same time. The economy was in long run equilibrium. Assuming all else equal, world scientists collaborated to invent a vaccine for everyone to be safe from deadly virus, raising productivity. This makes consumers and businesses optimist about the economy. At the same time, the commodity market, namely the oil market is calm, maintaining a stable supply. Given above scenario, what do you think will happen to the LRAS, SRAS and AD curves in short run? And what would happen to price level and output in the economy? What about in long run?
The aggregate demand aggregate supply model is a quite useful tool for us to understand the economy. So far, we saw only one change at a time, however, in reality, there can be multiple shocks at the same time. The economy was in long run equilibrium. Assuming all else equal, world scientists collaborated to invent a vaccine for everyone to be safe from deadly virus, raising productivity. This makes consumers and businesses optimist about the economy. At the same time, the commodity market, namely the oil market is calm, maintaining a stable supply. Given above scenario, what do you think will happen to the LRAS, SRAS and AD curves in short run? And what would happen to price level and output in the economy? What about in long run?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I don’t really understand what would happen, can someone explain to me please.
Transcribed Image Text:The aggregate demand aggregate supply model is a quite useful tool for us to understand the economy. So
far, we saw only one change at a time, however, in reality, there can be multiple shocks at the same time.
The economy was in long run equilibrium. Assuming all else equal, world scientists collaborated to invent a
vaccine for everyone to be safe from deadly virus, raising productivity. This makes consumers and
businesses optimist about the economy. At the same time, the commodity market, namely the oil market is
calm, maintaining a stable supply.
Given above sceñario, what do you think will happen to the LRAS, SRAS and AD curves in short run? And
what would happen to price level and output in the economy?
What about in long run?
Explain in words.
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