Equilibrium level of output in the short run

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Use AD and AS curves to explain the effects on the equilibrium price level and equilibrium level of output in the short run.

(a) An contractionary fiscal policy with the economy operating near full capacity.

(b) A expansionary monetary policy during a period of high unemployment and excess industrial capacity.

(c) A strong hurricane destroys energy plants which cause energy prices to increase, assuming that the Fed attempts to keep interest rates constant by accommodating inflation.

(d) The federal government pursues a contractionary fiscal policy while the Fed acts to keep output from falling.

Reference no: EM131392066

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