PART 1 Below there are the 4 steps for analyzing short run and long run macroeconomic...

PART 1

Below there are the 4 steps for analyzing short run and long run macroeconomic fluctuations. Apply them when answering the following two scenarios:

1.1 How does the increase in AI (Artificial Intelligence) affect the economy (AS-AD)? Follow the 4 steps below and present the excel graph or handwritten graph.

1.2 How does a reduction on exports affect the economy (AS-AD)? Follow the 4 steps below and present the excel graph or handwritten graph..

4 Steps for Analyzing Short-Run and Long-Run Macroeconomic Fluctuations

1. Decide whether the event creates a shift or a movement along the AD curve or the AS curve (or perhaps both).

2. Decide in which direction the curve moves or shifts.

3. Use the graph of AD and AS to determine the impact on output and the price level in the short-run. (create an excel graph with a logical AD and AS for the short run).

4. Use the graph of AD and AS to analyze how the economy moves from its new short-run equilibrium to its long-run equilibrium.

Expert Solution

Rahul Sunny answered 2 years ago

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