Post by cbb3 on May 5, 2016 10:45:53 GMT
Hi!
Tutorial 3 question 2 about increased deregulation and increased competition - the price setting curve moves up leading to higher real wage and lower unemployment. Is it right that this is what makes the AS curve shift down, leading to higher output and lower prices, and at the same time moving away from the natural level of output. In the answer key it sais that the AS curve will continue to move until it reaches the new natural level of output. Why can we just "set" a new natural level of output?
And why is it that the LM curve shifts - just didnt think this had anything to do with monetary policy....
Tutorial 3 question 2 about increased deregulation and increased competition - the price setting curve moves up leading to higher real wage and lower unemployment. Is it right that this is what makes the AS curve shift down, leading to higher output and lower prices, and at the same time moving away from the natural level of output. In the answer key it sais that the AS curve will continue to move until it reaches the new natural level of output. Why can we just "set" a new natural level of output?
And why is it that the LM curve shifts - just didnt think this had anything to do with monetary policy....
