What fiscal or monetary policies can the government use

Assignment Help Engineering Mathematics

Reference no: EM131530654

Question: In the accompanying diagram, the economy is in longrun macroeconomic equilibrium at point E1 when an oil shock shifts the short-run aggregate supply curve to SRAS2. Based on the diagram, answer the following questions

1506_SRAS 1.png

a. How do the aggregate price level and aggregate output change in the short run as a result of the oil shock? What is this phenomenon known as?

b. What fiscal or monetary policies can the government use to address the effects of the supply shock? Use a diagram that shows the effect of policies chosen to address the change in real GDP. Use another diagram to show the effect of policies chosen to address the change in the aggregate price level.

c. Why do supply shocks present a dilemma for government policy makers?

Reference no: EM131530654

Questions Cloud

Discuss the role this open source software has in mis : Research an open source software project.create a presentation with slides that describe the open source software and how it works.

What was the effect of the two shocks on real gdp : There were two major shocks to the U.S. economy in 2007, leading to the severe recession of 2007-2009. One shock was related to oil prices.

Explain at least three direct costs and three indirect costs : Discuss at least three direct costs and three indirect costs that each company incurred during the production of its navigation system.

Is the given news encouraging for economic growth : The Conference Board publishes the Consumer Confidence Index (CCI) every month based on a survey of 5,000 representative U.S. households.

What fiscal or monetary policies can the government use : In the accompanying diagram, the economy is in longrun macroeconomic equilibrium at point E1 when an oil shock shifts the short-run aggregate supply curve.

Identify ratio that reveals some quantified fact or trend : Each factor that you identify below must include a %, #, $ or ratio that reveals some quantified fact or trend.

Describe the security methods and controls : Describe the security methods and controls that need to be implemented in order to ensure compliance with these standards and regulatory requirements.

Is albernia facing a recessionary or inflationary gap : The accompanying diagram shows the current macroeconomic situation for the economy of Albernia.

Is brittania facing a recessionary or inflationary gap : The accompanying diagram shows the current macroeconomic situation for the economy of Brittania; real GDP is Y1, and the aggregate price level is P1.

User Account

All Pages