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Suppose the Economy Is Initially in Long-Run Equilibrium

question 94

Essay

Suppose the economy is initially in long-run equilibrium.For each of the shocks listed below,explain the long-run effects on output and the price level.
a.Labour supply decreases.
b.Productivity increases.


Definitions:

Polygenic

Referring to a trait or characteristic that is influenced by multiple genes rather than a single gene.

Monogenic Inheritance

A hereditary pattern where a trait is determined by a single gene.

Correlation And Causation

The relationship between two variables where one variable is found to be related to the other, but this does not necessarily indicate that one causes the other.

Richard Herrnstein

An American psychologist known for his work on intelligence and crime as well as the controversial book "The Bell Curve," co-authored with Charles Murray.

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