Suppose the Economy Is Initially in Long-Run Equilibrium

question 53

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)Labor supply decreases.
(b)The government shuts down the Bureau of Economic Analysis.
(c)Productivity increases.

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Definitions:

Staffing Agency

A company that matches employers with employees to fill job positions, often on a temporary or contract basis.

Financialization

The increasing dominance of financial markets, financial motives, financial institutions, and financial elites in the economy, affecting decision-making and resource allocation.

Financial Transactions

Deals or exchanges of monetary value between parties, including buying, selling, and trading goods, services, or financial instruments.

Union Suppression

Efforts by employers or governments to hinder or prevent the formation and activities of labor unions.