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Reference: Ref 20-6 (Figure: AD, AS Diagram) the Country in This

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  Reference: Ref 20-6 (Figure: AD, AS Diagram) The country in this diagram begins in equilibrium as shown and experiences a decrease in money supply. a. What is the short-run effect on net exports, and what is the effect on the economy? Show your answer graphically. b. If this country does not subsequently engage in monetary policy to counter this development, what will happen to the economy in the long run? Show your answer graphically. Reference: Ref 20-6 (Figure: AD, AS Diagram) The country in this diagram begins in equilibrium as shown and experiences a decrease in money supply. a. What is the short-run effect on net exports, and what is the effect on the economy? Show your answer graphically. b. If this country does not subsequently engage in monetary policy to counter this development, what will happen to the economy in the long run? Show your answer graphically.


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