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On well-labeled AD-AS diagrams, please show how the following events affect output and overall price level and explain intuitively.

[e] What could the federal government and the Federal Reserve do to stabilize the economy hit by a rise in oil price?

[f] If the government and the Fed do not intervene at all, how does a fall in the confidence of consumers and investors affect output and overall price level IN THE LONG RUN? [Hint: you are supposed to show the self-correction mechanism (SCM) of the economy.]

[g] If the government and the Fed do not intervene at all, how does a rise in oil price affect output and overall price level IN THE LONG RUN? [Hint: you are supposed to show the self-correction mechanism (SCM) of the economy.]

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M92197937

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