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Question 1

The graph below shows the AD-AS diagram for Norway. 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 Norway?

 

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Question 2

What happened to the frictional unemployment in Norway?

 

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Question 3

What happened to the structural unemployment in Norway?

 

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Question 4

What happened to the price levels in Norway?

 

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