Answer Happy

You are the economic minister of Bukanaland. The economy is in a
long-rum equilibrium
when each of the following aggregate demand shocks occur. What kind
of gap—
inflationary or contractionary --- will the economy face after the
shock, and what type of
fiscal policy would help move the economy back to potential
output?
a. A stock market boom increases the value of stocks held by
households.
b. Firms now believe that a recession in the near future is
possible.
c. The quantity of money in the economy declines and interest rates
increase.