Use a graph to show the effects of an expansionary monetary policy moving an economy out of recession and to potential real GDP. Explain what happens to aggregate demand, real GDP, and the price level
What will be an ideal response?
If the economy is in recession, it is currently at point A, below potential real GDP. An expansionary monetary policy will shift the aggregate demand curve to the right from AD1 to AD2, increasing real GDP and the price level until it reaches potential real GDP at point B.
Economics
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Give an example of an automatic stabilizer. Explain how automatic stabilizers work in the case of recession
What will be an ideal response?
Economics
In the market for money, the demand curve is made up of
A. savers. B. neither borrowers nor savers. C. borrowers. D. a combination of borrowers and savers.
Economics