Figure 16 Negative Supply and Demand Shocks and the 2007-2009 Crisis (a) Aggrega

Question

Figure 16 Negative Supply and Demand Shocks and the 2007-2009 Crisis (a) Aggregate Demand and Aggregate Supply Analysis Inflation Step 3. Worsening Rate, ? | financial crisis shifted LRAS AD further leftward while AS shifted Step 2. leading to an increase in inflation and a decline in output AS AS Step 1. A negative supply shock shifted AS upward and a negative demand shock shifted AD leftw AD,AD Step 4. leading to a further decine in output and a fal in inflation. AD Aggregate Output, Y b) Unemployment and Inflation During the Perfect Storm of 2007-2009 Year Unemployment Rate % ) Inflation ( Year to Year) (%) 4.6 4.6 2.5 2006 2007 2008, June 2008, Dec. 2009, June 2009, Dec 7.2 9.5 10.0 2.8

Explanation / Answer

Fig-16

From graph a and the table of b, we can say that in 2006 unemployment was at the natural rate of 4.6%. From 2006 to 2007 aggregate supply decreased, as a result of inflation increased. In 2008 June, demand decreased. With low supply and low demand, inflation increased with more unemployment. In 2008 dec, aggregate supply increased, as a result, inflation decreased and unemployment is increased. In 2008 June, aggregate demand decreased further, as a result, inflation became negative and unemployment decreased further. In 2009 December, aggregate supply decreased, inflation increased and unemployment increased.

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.