A vertical long-run aggregate supply curve shows that: (a) wages and prices are sticky. (b) changes in technology do not affect the productive capacity of the economy. (c) the availability of resources does not affect the productive capacity of the economy. (d) changes in the price level do not affect the full employment productive capacity of the  economy

In order to mitigate the economic impacts of the COVID-19 recession, the Government plans to run large budget deficits to improve infrastructure and build more public and transitional houses in New Zealand.   Briefly describe the impact of this budget plan (with everything else held constant) on the following variables in the short run.  (a) aggregate demand; (b) the price level; (c) the supply of loanable funds; (d) the real interest rate; (e) the relative attractiveness of NZD-denominated assets; (f) net foreign investment; (g) the exchange rate of the NZ dollar; (h) NZ exports (i) NZ imports; (j) the value of NZ net exports.

1) The natural rate of unemployment is the normal level of unemployment: •that exists without government intervention. •in an economy in the long run. •in an economy with a high labor force participation rate. •in an economy in the short run. 2) The normal level of unemployment that persists in an economy in the long run is: •the equilibrium rate of underemployment. •zero, as long as the market is equilibrium. •zero with effective public policy. •the natural rate of unemployment

In the year 2000, the Chinese economy’s growth was not as fast as the government expected. The Chinese government prolonged the Labour Day vacation (in May) to 7 days so that people could spend more. a. Explain this decision, using the model of aggregate demand and aggregate supply. (6%) b. Why did the Chinese government not wait until the economy adjusted back to its expected long-run position of high economic growth? (2%)