Suppose the Economy Is Initially in Long-Run Equilibrium

question 16

Essay

Suppose the economy is initially in long-run equilibrium.For each of the shocks listed below,explain the short-run effects on output and the price level.
(a)A stock market crash reduces consumers' wealth.
(b)Businesses decide to hold larger inventories.
(c)The government cuts defense spending.
(d)Foreign countries buy more U.S.goods.

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Definitions:

Sexist Language

The use of words, phrases, or tones that discriminate, trivialize, or demean individuals based on their gender.

Dangling Modifier

A word or phrase that modifies a word not clearly stated in the sentence, often causing confusion or misinterpretation.

Strong Verb

A specific, vivid verb that accurately describes an action, making writing more engaging and impactful.

Scleroderma

A chronic connective tissue disease generally classified as one of the autoimmune rheumatic diseases, characterized by thickening and hardening of the skin.