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Question
The economy of Macroland is initially in long-run equilibrium. A severe drought causes an adverse supply shock.a. What happens to prices and output in the short run?
b. What would happen to prices and output in the long run if there is no policy accommodation?
c. If the Central Bank of Macroland wants to prevent the short-run changes in price and output, what policy action could it take? How would the results of this policy action differ from the prices and output that would result in the long run with no policy action?
Answer
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Related questions
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If the short-run aggregate supply curve is horizontal and the long-run aggregate supply curve is vertical, then a change in the money supply will change ______ in the short run and change ______ in the long run.
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C) both prices and output; only prices
D) both prices and output; both prices and output
Q:
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Q:
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Q:
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B) the saving rate.
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Q:
If the labor force is growing at a 3 percent rate and the efficiency of a unit of labor is growing at a 2 percent rate, then the number of effective workers is growing at a rate of:
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Q:
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