According to the AD-AS Model,the Economy Always Returns to Its

question 93

Essay

According to the AD-AS model,the economy always returns to its long-run potential growth rate in the long run.Why then should government intervene and do anything when the economy suffers a negative aggregate demand shock and falls into a recession?

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Definitions:

Soviet Occupation

Period of control or governance by the Soviet Union over other nations, especially in Eastern Europe after World War II.

Kulaks

Wealthy peasants in Russia who owned larger farms and were considered enemies by the Bolsheviks during the early Soviet period, leading to their persecution.

Vichy

A city in France that was the seat of the French government from 1940 to 1944 during the occupation by Nazi Germany in World War II, associated with the collaborationist Vichy regime.