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Q. Explain about Labor Market in AS-AD model?
In AS-AD model, economy will always be on the response curve - the thick line in chart below.
Figure: The labor in the AS-AD model
Response curve has a horizontal part and a downward sloping part. In IS-LM model, we had only horizontal as real wages where constant. We couldn't move beyond LB.
We can illustrate the response curve by examining economy moving from point A to point C.
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I want you to solve problem in Macroeconomics.It is in the file attachment.
Q. Describe Exports and imports in AS-AD model? Exports and imports. This is more difficult to justify owing to exchange rate. Suppose that we have a flexible exchange rate a
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