How would the shocks affect real aggregate income

Reference no: EM133713092

Problem

Consider an economy in long run equilibrium. According to the AS/AD model, how would the shocks affect real aggregate income (Y), real interest rates (r), and the price of goods and services (P) in the long run, all else equal? For each shock, make a long run prediction (up, down, or no change) for all three variables, and illustrate your predictions with an IS/LM diagram and an AS/AD diagram.

Reference no: EM133713092

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