Answer to Question #15116 in Macroeconomics for harman

Question

1. Consider a macroeconomy was initially at equilibrium level of real GDP. Using an aggregate demand and aggregate supply diagram or model of the economy, graphically illustrate and discuss the short-run and long-run effects of the following events upon the economy:

(a) The Central Bank within the economy lifts interest rates.
(b) There is an increase in private domestic investment spending.
(c) An increase in international oil prices.
(d) An appreciation in the foreign exchange rate value of the economy’s currency.
(e) A fall in real estate prices in the capital cities of the country (hint: think of the effect upon one’s wealth level)
(f) The country main exports fall in price while the goods the country imports from abroad rise in price

Answer 1

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