Demonstrate how economy reached its long-run equilibrium

Assignment Help Macroeconomics

Reference no: EM133129145 , Length: 3 pages

Assignment

In a 3-5-page, APA-formatted paper, please provide the following information:

Question 1: Describe intuitively with economic reasoning and show in a graph how September 11, 2001 impacted the AD/AS curve in the USA. Please demonstrate your reasoning under followings scenarios:
• State of panic in the economy
• Shortage of demand
• Lowering price expectation
• Increase in unemployment
• Lowering wages
• Lowering taxes
• Increase in money supply and reduction of target interest rate by the FED through Open Market Operations

Question 2: Now suppose that the economy was in state of equilibrium before September 11, 2001:
• The aftermath of the recession in the USA was a cyclical downturn or an economic shock?
• If it was an economic shock, using an AD-AS diagram, demonstrate how the economy reached its long-run equilibrium by appropriate monetary and fiscal policy

APA FORMAT

Reference no: EM133129145

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