An economy is initially at its long-run equilibrium. In reducing
the country's carbon footprint, the government now spends a lot of
money on tree plantation around urban areas.
in the short run, the aggregate demand curve shifts right. In
the long run the price level increases, output returns to its
potential, and real wages do not change.
In the short run, the aggregate demand curve shifts left. In the
long run, the price level decreases, output returns to its
potential,...