Suppose That, at Any Given Level of Income, People Decide

Essay

Suppose that, at any given level of income, people decide to import more.
(A) Using the agpegate demand curve and the intlation adjustment line, describe how this affects real GDP, cansumption, investment net exgarts, interest rates, and inflation in the shart run, the medium run, and the long run. Provide an economic exglanation of your results. Assume the econamy is initially at the paint of lang-run equilibriun.
(B) Naw, suppose the central bark wants to revert to the inflation rate thet prevaled priar to the increase in impart spenfing. How can it acheve its abjective? Describe the short-run, medium-run, and long-run effects of its policy on real GDP and inflation.