Using the aggregate demand and aggregate supply model, draw an economy in a boom with equilibrium national income above full employment GDP. If the government decides to intervene to return the economy to full employment, illustrate and explain what will happen to the economy in the short run and in the long run.© BrainMass Inc. brainmass.com March 4, 2021, 5:46 pm ad1c9bdddf
Assuming the question is related to an economy BELOW full employment:
Suppose that the economy is initially point B, producing at Y0 below full employment level Yf. Suppose the government decides to intervene the economy through an expansionary fiscal policy ( in ...
Help is given to an economy in a boom with equilibrium national income above full employment GDP.