The economy can be in two states: (1) on the SRAS or (2) on both the SRAS and LRAS.
Remember the demand shocks - GWEP
and the supply shocks - PNC
Be familiar with short run effects of positive demand shock-inflationary gap- and negative demand shock - recessionary gap.
The homework is listed below and the notes are attached.
Notes - AD, SRAS and LRAS
HW - Complete Module 19 questions (to be turned in)
- Read Module 20 and 21
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