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Consider a macroeconomic model of an economy in Long Run market equilibrium. Suppose there were a shock which was going to cause a decrease in aggregate demand. a. What steps could a government take in order to avoid the long-run market correction? b. Why would the government want to intervene rather than allow the market to correct itself? c. Why do people oppose government intervening in such ways? d. Why does the government typically only intervene during recessionary periods rather than also in expansionary periods as well?

Macroeconomics, Economics

  • Category:- Macroeconomics
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