Hello, I want to ask two questions about Changes in Equilibrium: Aggregate Supply Shocks. 1. The...

Hello, I want to ask two questions about Changes in Equilibrium: Aggregate Supply Shocks.

1. The consequences of climate change on the economy is a popular topic in the media. Suppose that a series of wildifres destroys crops in the western states at the same time a hurricane destroys refineries on the Golf Coast.

a) Using aggregate demand and supply analysis, explain how output and the inflation rate would be affected in the short and long runs.

b) Show your answer graphically.

2. Suppose that the President gets legislation passed that encourages investment in research and developent of new technololgies. Assuming this policy results in positive technological change for the U.S. economy, what does aggregate demand and supply analysis predict in terms of inflation and output?

Please answer these with deep insight and clear explanation. Thank you

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Expert Solution

Rahul Sunny answered 1 year ago

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