Unit 3 Test Assume the US economy is currently at long run equilibrium. a. Draw a correctly labelled graph of aggregate demand and aggregate supply and show each of the following i. The long run aggregate supply curve ii. The current equilibrium output and price levels, labelled as Ye and Ple respectively b. Assume the government increases spending on national defense without rasing taxes. i. On your graph from part a) show how the government action affects aggregate demand ii. How will this government action affect the unemployment rate in the short run? Explain A

Unit 3 Test Assume the US economy is currently at long run equilibrium. a. Draw a correctly labelled graph of aggregate demand and aggregate supply and show each of the following i. The long run aggregate supply curve ii. The current equilibrium output and price levels, labelled as Ye and Ple respectively b. Assume the government increases spending on national defense without rasing taxes. i. On your graph from part a) show how the government action affects aggregate demand ii. How will this government action affect the unemployment rate in the short run? Explain A

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates

Section: Chapter Questions

Problem 1QA

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