Asked by kashif
Assume Real GDP is at potential level initially and government is running a balanced budget. Now assume that the stock market is seeing a boom and causing a affecting real wealth of households.
a. What is the effect of this change on the economy's Real GDP, price level and unemployment in the short run?
b. What is the effect of this business cycle shock on the budget balance. Explain to get full credit.
a. What is the effect of this change on the economy's Real GDP, price level and unemployment in the short run?
b. What is the effect of this business cycle shock on the budget balance. Explain to get full credit.
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