The Following Question Has Three Parts, Which Are to Be

question 57

Essay

The following question has three parts, which are to be answered independently of each other. Graphically show your response to the following shocks in the AD-AS model:
A) If a new round of consumer pessimism abounds, what would happen to the economy's short-run growth rate?
B) If there is a positive, but temporary, monetary shock, what would happen to the economy's short-run growth rate?
C) If a country's imports temporarily increase, but exports stay the same, what would happen to the economy's short-run growth rate?

• A) If a new round of consumer pessimism abounds, what would happen to the economy's short-run growth rate?
• B) If there is a positive, but temporary, monetary shock, what would happen to the economy's short-run growth rate?
• C) If a country's imports temporarily increase, but exports stay the same, what would happen to the economy's short-run growth rate?

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Definitions:

Accounting Profit

The difference between total revenue and total explicit costs, not accounting for implicit costs, according to traditional accounting methods.

Entrepreneur's Potential Earnings

Entrepreneur's potential earnings are the anticipated income an entrepreneur expects to generate from their business ventures, considering the risks and opportunities involved.

Annual Lease

is a contract specifying the terms under which one party agrees to rent property from another party for a period of one year.