Suppose a large earthquake destroys many houses and buildings on Suppose a large earthquake destroys many houses and buildings on the West Coast but fortunately results in little loss of life. Show how to think about this event using the IS curve. Explain how actual output, potential output, and short-run output are affected in the short run, and why. Suppose a large earthquake destroys many houses and buildings on
Suppose a large earthquake destroys many houses and buildings on
Suppose a large earthquake destroys many houses and buildings on the West Coast but fortunately results in little loss of life. Show how to think about this event using the IS curve. Explain how actual output, potential output, and short-run output are affected in the short run, and why.
Suppose a large earthquake destroys many houses and buildings on
The earthquake which would be included in the natural calamities would result in the loss in the houses and buildings which would cause reduction in the infrastructure. The reduction in the infrastructure would result in the fall in the productivity of labor which would result in the fall in the aggregate demand and fall in the output.
The IS curve is the curve which shows the relationship between the interest rate and the real GDP or the output. The increase in the aggregate demand would shift the IS curve to the right and the fall in the aggregate demand would cause a leftward shift of the IS curve.
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