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.

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Definitions:

Placenta

This organ, developing within the uterus during pregnancy, functions to feed the fetus with necessary nutrients and oxygen and clear out its waste products.

Gestational Age

The age of an embryo or fetus (or the duration of the pregnancy) starting from the first day of the mother's last menstrual period.

Thirty-Seven

A number, specifically the integer following thirty-six and preceding thirty-eight.

Mesoderm

The middle layer of an embryo in early development, which gives rise to muscles, bones, and blood vessels.