MATLAB: An Introduction with Applications
6th Edition
ISBN: 9781119256830
Author: Amos Gilat
Publisher: John Wiley & Sons Inc
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For Shock D:
- Suppose the economy starts in the long run equilibrium. Illustrate changes that the shock will cause in the short run (using AD-SRAS). Explain why each curve shifts.
- Determine how the price level and output will be affected in the short run.
- Mark the output gap on the diagram. Is the output gap positive or negative? Is the economy is booming, or is it in a recession?
- On the same diagram illustrate how the economy will adjust to the shock in the long run and explain the mechanism.
- Determine how the price level and output will be affected in the long run.
D. A country the US trades with experiences an economic boom
As a result of this shock, in the short run the (SRAS Curve/AD Curve) will shift?
In consequence, in the short run prices and output will?
In the short run, there will be a ? (negative/postive) output gap,which means there will be a ? (boom/recession)
As time passes, because of high unemployment the wages in the economy will? (decrease/increase)
As a result, the SRAS curve will shift ? (right/left), causing the price level to ? (increase/fall) and output to eventually return to its long run level Y*.
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D) A COUNTRY THE US TRADES WITH HAS ECONOMIC BOOM
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