The economy is in a recession with high unemployment and low output. a)Draw a graph of aggregate demand and aggregate supply to illustrate the current situation. Be sure to include the aggregate-demand curve ,the short-run aggregate-supply curve ,and the long-run aggregate-supply curve. b) Identify an open-market operation that would restore the economy to its nature rate. c)Draw a graph of the money market to illustrate the effect of this open-market operation.Show the resulting change in the interest rate. d) Draw a graph similar to the one in part a to show the effect of the open-market operation on output and the price level.Explain in words why the policy has the effect that you have shown in the graph.
The economy is in a recession with high
a)Draw a graph of aggregate demand and
b) Identify an open-market operation that would restore the economy to its nature rate.
c)Draw a graph of the
d) Draw a graph similar to the one in part a to show the effect of the open-market operation on output and the price level.Explain in words why the policy has the effect that you have shown in the graph.
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