Reference no: EM131388079
On well-labeled AD-AS diagrams, please show how the following events affect output and overall price level and explain intuitively.
[a] A soaring stock market;
[b] A nationwide fall in input prices;
[c] Comparing [a] and [b], please explain the statement that NOT ALL EXPANSIONS (OR BOOMS) ARE ALIKE.
[d] What could the federal government and the Federal Reserve do to stabilize the economy with a soaring stock market?
[e] What could the federal government and the Federal Reserve do to stabilize the economy with a nationwide fall in input prices?
[f] If the government and the Fed do not intervene at all, how does a soaring stock market affect output and overall price level IN THE LONG RUN? [Hint: you are supposed to show the self-correction mechanism (SCM) of the economy.]
[g] If the government and the Fed do not intervene at all, how does a nationwide fall in input prices affect output and overall price level IN THE LONG RUN? [Hint: you are supposed to show the self-correction mechanism (SCM) of the economy.]
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