RQch12 - CH 12 1.6 A decline in stock prices would weigh...

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CH 12 1.6 A decline in stock prices would “weigh heavily” on businesses and consumers because it decreases household wealth, which decreases consumer spending. The drop in stock prices also made it harder for businesses to finance investment spending. These restraints on consumption and investment spending slowed down total spending in the economy and contributed to the slow recovery from the 2001 recession. (For a more comprehensive analysis, you should include a complete analysis on AD-SRAS- LRAS model.) 2.5 a. A higher price level would cause a movement along the long-run aggregate supply curve. b. A decrease in the labor force would cause the long-run aggregate supply curve to shift to the left. c. A decrease in the quantity of capital goods would cause the long-run aggregate supply curve to shift to the left. d. Technological improvement would cause the long-run aggregate supply curve to shift to the right. 2.6
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This note was uploaded on 04/22/2010 for the course ECONOMICS ECON1002 taught by Professor None during the Spring '10 term at Hong Kong Institute of Vocational Education.

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RQch12 - CH 12 1.6 A decline in stock prices would weigh...

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