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Business, 05.05.2020 07:29 hickslily9

Suppose the economy starts off in long-run equilibrium. If the pandemic ends up immobilizing 10% of the labor force in the U. S. permanently how would this affect output and price in the short run and in the long run? Assume that people do not adjust their price expectations in the short run. Illustrate this scenario using the AD-AS model just like you did in Question 1 above, and state clearly what happens to P and Y in the short-run equilibrium, and then in the long-run equilibrium.

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