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Consider the Basic AD/AS Macro Model in Long- Run Equilibrium

question 28

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Consider the basic AD/AS macro model in long- run equilibrium. A negative AS shock will the price level and output in the short run. In the long run, the price level will
And output .


Definitions:

Interstate Banking

The practice or system allowing banks to operate branches and offer services in more than one state, previously restricted in the U.S.

M2

A measure of the money supply that includes cash, checking deposits, and easily convertible near money, such as savings deposits and money market securities.

M1

A measure of the money supply that includes all physical currency, as well as demand deposits, checking accounts, and other liquid assets easily convertible to cash.

Small Denomination Time Deposits

Time-bound deposit accounts in banks with relatively small deposit requirements, offering fixed interest rates for the duration of the deposit term.

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