Elucidate the process and causes of economic events

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Reference no: EM1352737

Using aggregate demand, short-run aggregate supplies, and long-run aggregate supply curves, explain the process and causes by which each of the following economic events will move the economy from one long-run macroeconomic equilibrium to another. Use the diagrams below, resizing them as necessary, to illustrate your analysis. In each case, what are the short-run and long-run effects on the aggregate price level and aggregate output?

a. There is a decrease in households wealth due to a decline in the stock market.

b. The government lowers taxes, leaving households with more disposable income, with no corresponding reduction in government purchases.

Reference no: EM1352737

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