6. Let\'s say that in 2019 the United States experiences abnormally good weather
ID: 1118321 • Letter: 6
Question
6. Let's say that in 2019 the United States experiences abnormally good weather. This weather is particularly beneficial for agricultural crop production. Determine how the run of good weather affects the U.S real GDP, price level, and unemployment rate in both the short run and the long run. You can use graphs to derive your answers, but place your answers in the boxes below. Assume that the economy starts in long-run equilibrium, assume no other changes, and make all comparisons to the initial long-run equilibrium. Short run Long run
Explanation / Answer
Good weather condition would be beneficial for production hence short run production will rise increasing short run output. Because of rise in production the employment level will also rise. decreasing the unemployment rate in short run. And the price level will reuce too as short run supply curve will shift upward.
HOwever such changes do not increase wages and the cost remain same of production then long run supply curve will also shift rightside signiffying increase in outout, new decreased level of natural unemployment rate and decreased price level in long run signifying econmic growth.
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