Real-world economies get hit with lots of shocks to aggregate demand and real shocks. Categorize each scenario as an aggregate d
emand shock or a real shock. How does each shock affect the aggregate demand curve and the long run aggregate supply curve of United States Economy? (i.e., Increase A/D, Decrease A/D, Increase LRAS, Decrease LRAS). a) Steelworkers go on strike, so less steel is produced Select b) A tornado destroys factories in Louisiana. Select c) Consumer optimism increases. Select d) The stock market rallies to 52-week highs increasing consumer wealth.
steel workers go on strike so less steel is produced : this will cause a decrease in the log run aggregate supply of steel in the economy
A tornado destroys factories in Louisiana.: this will cause a decrease in the log run supply of factory products and by-products in the economy
Consumer optimism increases.leads to an increase in the aggregate demand curve
The stock market rallies to 52-week highs increasing consumer wealth. this will definitely lead to an increase in the aggregate demand curve because with more money to spend the demand curve will increase
The appropriate approach is "Principal-agent problems".
Explanation:
A contradiction of objectives or priority between someone individual or organization as well as the authorized accompanying documents to operate over its behalf is considered as Principal-agent problem.
The possession of a commodity or fundamental assigns immediate supervision of that resource to some other agency may transpire in whatsoever circumstance.