Using the AD and Solow Growth figure shown, suppose Point A refers to the economy's long run equilibrium, and that Point A is also where the economy is at present. How will the economy be affected under the following scenarios? Illustrate your answers using graphs. (Treat each scenario as independent of the others.) SCENARIO 1 a. A reliable forecast is released that indicates that a recession is forthcoming. Consumers react to this forecast. b. Uncertainty amplifies the shock in (a). SCENARIO 2 a. The federal government begins a new subsidized training program (across the nation) for workers to enhance their consumer skills. b. In response to the above shock, workers engage in intertemporal substitution.

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The Answer of  Using the AD and Solow Growth figure shown, suppose Point A refers to the economy's long run equilibrium, and that Point A is also where the economy is at present. How will the economy be affected under the following scenarios? Illustrate your answers using graphs. (Treat each scenario as independent of the others.) SCENARIO 1 a. A reliable forecast is released that indicates that a recession is forthcoming. Consumers react to this forecast. b. Uncertainty amplifies the shock in (a). SCENARIO 2 a. The federal government begins a new subsidized training program (across the nation) for workers to enhance their consumer skills. b. In response to the above shock, workers engage in intertemporal substitution.

Using the AD and Solow Growth Figure Shown, Suppose Point