Answer to Question #55912 in Macroeconomics for nada
put your self in the shoes of an economic policymaker. the economy in the equilibrium with price = 100 and Q = 3000 = potential GDP . you refuse to accommodate inflation ; thats is , you want to keep prices absolutely stable at p = 100 , no matter what happens to output . you can use monetary and fiscal policies to affect aggregate demand , but yo cannot affect aggregate supply in the short run how would you respond to :
a) a surprise increase in the investment spending.
b) a sharp food-price increase following catastrophic flooding of the mississippi river .
c) a productivity decline that reduce potential output .
d) a sharp decrease in net exports that followed a deep depression in the east asia