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Answer the Following Questions Using an Aggregate Demand-Aggregate Supply Model

question 99

Essay

Answer the following questions using an aggregate demand-aggregate supply model.
a.Represent an economy at long-run equilibrium.
b.Show what happens when aggregate demand decreases.
c.Is this economy currently in an expansion or recession?
d.What type of fiscal policy would you suggest be taken by Congress?
e.What will this policy do to your aggregate demand-aggregate supply model?


Definitions:

Average Payments

The mean amount paid over a defined period payments.

Average Daily Float

The average amount of uncollected funds represented in checks or other negotiable instruments over a specified period.

Lockbox System

A service provided by banks to accelerate collection of payments by having those payments sent to a special post office box rather than to the company.

Treasury Bills

Represent short-term government securities issued at a discount from the par value and mature without interest payments.

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