Based on Your Understanding of the Aggregate Supply and Aggregate

question 3

Essay

Based on your understanding of the aggregate supply and aggregate demand model and the IS-LM model,graphically illustrate and explain what effect an decrease in the money supply will have on the economy.In your graphs,clearly illustrate the short-run and medium-run equilibria.

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Definitions:

Productivity Increases

Improvements in the efficiency of producing goods or services, leading to higher output from the same or lesser inputs.

Labor Force

The total number of people, including both the employed and unemployed, who are actively looking for work in an economy.

National Income

The total amount of money earned within a country from the production of goods and services over a specific period, typically one year.

Strike

A strike is a collective action undertaken by workers refusing to work, aiming to gain concessions from their employer regarding wages, conditions, or policies.