1. a. Within the Aggregate Demand-Aggregate Supply Macroeconomic model, discuss in general the difference in the...

1. a. Within the Aggregate Demand-Aggregate Supply Macroeconomic model, discuss in general the difference in the impacts on nominal and real variables in the long and short run.

1. b. Compare the effects of an aggregate-demand-induced recession with an aggregate-supply-induced recession (no diagram necessary). How would you recognize that a recession is induced by demand or supply? What policies would be appropriate in each of the two cases?

Expert Solution

Rahul Sunny answered 8 months ago

Aggregate Supply (AS) and Aggregate Demand (AD) model and AS/AD curves are essential to understand macroeconomic...

Aggregate Supply (AS) and Aggregate Demand (AD) model and AS/AD curves are essential to understand macroeconomic fluctuations (business cycles). Discuss the importance AS-AD model in explaining the macroeconomic conditions of the economy and business cycles like recessions. What factors shift AS and AD curves? How do you explain macroeconomic fluctuations using AS-AD model and AS/AD curves?

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