inflationary or recessionary gap , will the economy face after the AD shock indicated by the shift in AD curves ? What types of fiscal policy instruments will help move the economy back to the potential level of output ( real GDP )? Give specific examples .
At the long-run macroeconomic equilibrium , the stock market boom occurs and this increases the value of stocks households hold . ( See the set of graphs below and shifts in graphs in the two-steps )
The government increases its purchases ( spending ) due to natural disasters . ( See the set of graphs below and shifts in graphs )
Assume the Central Bank reduces the money supply in the economy which leads to an increase in the interest rates . ( See the set of graphs below and shifts in graphs )
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