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Now suppose that the government decides not to take any action in response to the short-run economic impact of the severe weather.In the long-run, when the government does nothing, the output in the economy will be $110 billion billion and the price level will be $110

Sagot :

Severe weather, which raises manufacturing costs, will restrict aggregate availability. The aggregate supply curve will move to the left as a result. As a result, the price level will rise but actual GDP will fall.

A decrease in RGDP raises unemployment because companies will recruit fewer people to create the same amount of production. This short-run economic outcome is known as Stagflation, because inflation is high, economic growth is slowing, and unemployment is high.

If the government does nothing, the economy will eventually reach the long run equilibrium, where output is $110 billion and the price level is $110 billion.

Learn more about to short-run economic visit here;

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