(Answered) Suppose the economy was at equilibrium before the start of

Economics

Suppose the economy was at equilibrium before the start of the recession. Show this using the IS-LM, Keynesian cross, AD-SRAS-LRAS and money market spaces.

Following the start of the recession, what happened to aggregate demand and output? (You should be able to see this from the plots in section 1 above). Show this shift in AD and IS curves.

How could monetary policy have ensured a faster return to the long-run equilibrium? Use the money market and LM curves to show this.

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Microeconomics, Economics

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