Use the dynamic aggregate demand and aggregate supply model and start with Year 1 in a long-run macroeconomic equilibrium. For Year 2, graph aggregate demand, long-run aggregate supply, and short-run aggregate supply such that the condition of the economy will induce the government to conduct contractionary fiscal policy. Briefly explain the condition of the economy and what the government is attempting to do.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Question

Quizplus · Accepted Answer

The Answer of Use the dynamic aggregate demand and aggregate supply model and start with Year 1 in a long-run macroeconomic equilibrium. For Year 2, graph aggregate demand, long-run aggregate supply, and short-run aggregate supply such that the condition of the economy will induce the government to conduct contractionary fiscal policy. Briefly explain the condition of the economy and what the government is attempting to do.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Use the Dynamic Aggregate Demand and Aggregate Supply Model and Start