Page 712 - The Principle of Economics

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PART TWELVE SHORT-RUN ECONOMIC FLUCTUATIONS
b.
c.
prices and real output. Explain in words why the aggregate quantity of output supplied changes. Now use the diagram from part (a) to show the new long-run equilibrium of the economy. (For now, assume there is no change in the long-run aggregate-supply curve.) Explain in words why the aggregate quantity of output demanded changes between the short run and the long run.
How might the investment boom affect the long- run aggregate-supply curve? Explain.
13. In 1939, with the U.S. economy not fully recovered from the Great Depression, President Roosevelt proclaimed that Thanksgiving Day would fall a week earlier than usual so that the shopping period before Christmas would be lengthened. Explain this decision, using the model of aggregate demand and aggregate supply.