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Question 1

The graph below shows the AD-AS diagram for the US. Suppose that the economy experiences a negative aggregate demand shock denoted by the move from AD1 to AD2.

Note that the new curve is shown in gray.

What has happened to the cyclical unemployment in the US?

 

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Question 2

What happened to the frictional unemployment in the US?

 

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Question 3

What happened to the structural unemployment in the US?

 

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Question 4

What happened to the price levels in the US?

 

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