ECO -Your economy is in full employment equilibrium

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Your economy is in full employment equilibrium. Suddenly an improvement in technology moves the LRAS to the right. What happens to the level of income relative to the full employment level? What happens to prices and price expectations over time if no policy actions are taken? If this economy were open with a fixed exchange rate. What would be the best policy to take if you decided to more rapidly get back to full employment? 

    • 12 years ago
    ECO -Your economy is in full employment equilibrium
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