Essay
Explain what happens to the macroeconomy in the short run in each of the following circumstances:
(a) There is deep recession in Europe.
(b) Housing values rise above their trend.
(c) Mortgage lenders raise interest rates.
(d) The government decides to close 20 percent of its military bases around the country.
(e) The long-run interest rate rises.
Correct Answer:
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(a) This is an adverse demand shock: 
(b...View Answer
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Correct Answer:
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(b...View Answer
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