Starting from short-run equilibrium,
graphically illustrate and explain what happens to RGDP, the
average price level, and unemployment if consumer confidence
decreases and the cost of domestic resources rises.
Starting from long-run equilibrium,
graphically illustrate and explain what happens to RGDP, the
average price level, and unemployment if the cost of labor
decreases and business expectations decline.
The following follow-up questions are based on your conclusions
#2
Follow-up: Is the
economy at the natural rate of unemployment? Explain.
Follow-up: How...