Suppose an economy experiences an increase in exports. a. Using the Aggregate Demand- Aggregate Supply model, explain the effect of this increase in the short run. b. What can the policy-makers do to address this shock and why should policymakers take any action? Would you choose a fiscal policy or a monetary policy? Why? With diagrams
Suppose an economy experiences an increase in exports. a. Using the Aggregate Demand- Aggregate Supply model, explain the effect of this increase in the short run. b. What can the policy-makers do to address this shock and why should policymakers take any action? Would you choose a fiscal policy or a monetary policy? Why? With diagrams
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter12: Fiscal Policy, Incentives, And Secondary Effects
Section: Chapter Questions
Problem 8CQ
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Question
![Suppose an economy experiences an increase in
exports. a. Using the Aggregate Demand-
Aggregate Supply model, explain the effect of
this increase in the short run. b. What can the
policy-makers do to address this shock and why
should policymakers take any action? Would you
choose a fiscal policy or a monetary policy?
Why? With diagrams](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc84b055e-144c-410a-b600-78f0e07aa308%2F20a80a05-1ce2-40af-9b88-4293859a3467%2Fizqsfv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose an economy experiences an increase in
exports. a. Using the Aggregate Demand-
Aggregate Supply model, explain the effect of
this increase in the short run. b. What can the
policy-makers do to address this shock and why
should policymakers take any action? Would you
choose a fiscal policy or a monetary policy?
Why? With diagrams
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