Explain What Happens in the Long-Run Aggregate Demand-Aggregate Supply Model

question 7

Essay

Explain what happens in the long-run aggregate demand-aggregate supply model when there is a recession.Assume that the economy is initially at the full-employment level of real GDP.

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Definitions:

Tranquility

A state of peace and calm.

Hobbes

Refers to Thomas Hobbes, a 17th-century English philosopher known for his work in political philosophy, including his social contract theory.

Misfortunes

Unfortunate events or occurrences that bring about suffering, loss, or hardship.

Pity

A feeling of sorrow and compassion caused by the suffering and misfortunes of others.