ECON 1BB3 Lecture Notes - Lecture 16: Autarky
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ECON 1BB3 Full Course Notes
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Econ 1bb3 ad-as model: draw a diagram showing a closed economy that is currently in an expansion. Show what happens to the economy in the short run. Show what happens in the short run and the long run, including the impact on output, the unemployment rate, and the price level. Describe how the economy moves from short run equilibrium to long run equilibrium (assuming that the government takes no action). Y: a closed economy begins in long run equilibrium. Increasing uncertainty about the future causes consumer spending to decline drastically. Show what happens in the short run, including the impact on output, the unemployment rate, and the price level. Now suppose that the government intervenes, using monetary policy. Show the new equilibrium, after the policy has taken effect. Y: suppose a closed economy starts in long run equilibrium. An increase in oil prices causes a negative supply shock (to the sras curve only): show the new short run equilibrium.