Using the AD-AS model, graph and explain what would happen to unemployment and inflation in the...

Using the AD-AS model, graph and explain what would happen to unemployment and inflation in the following situations.

a) Assume the economy begins at potential output. Consumer confidence rises. What is the short run effect?

b) Starting with the previous question, consumer confidence rises. What is the long run effect?

Expert Solution

Rahul Sunny answered 2 years ago

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