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Economics: The Basics 1st Edition by Mike Mandel
Edition 1ISBN: 978-0071316026Economics: The Basics 1st Edition by Mike Mandel
Edition 1ISBN: 978-0071316026 Exercise 4
Suppose that the Federal Reserve cuts the fed funds rate.
a) Does the cut in rates cause a shift in the aggregate supply curve or aggregate demand curve?
b) Draw an aggregate supply-aggregate demand diagram to illustrate the impact of the interest rate cut. Label the original aggregate equilibrium and the final aggregate equilibrium.
c) Does output rise or fall in the short run? Does output rise or fall in the long run?
a) Does the cut in rates cause a shift in the aggregate supply curve or aggregate demand curve?
b) Draw an aggregate supply-aggregate demand diagram to illustrate the impact of the interest rate cut. Label the original aggregate equilibrium and the final aggregate equilibrium.
c) Does output rise or fall in the short run? Does output rise or fall in the long run?
Explanation
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a)When the Federal Reserve cuts the fed ...
Economics: The Basics 1st Edition by Mike Mandel
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