Effects in an ad-as diagram


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Consider the following series of shocks to the U.S. economy and show the effects in an AD-AS diagram (using an upward-sloping short-run aggregate supply curve). Be sure to label the curves clearly.

Shock 1: An increase in the costs of fringe benefits because of the rising cost of providing health insurance to employees

Shock 2: A bubble in the housing market that bursts

Shock 3: A recession in the euro zone

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Microeconomics: Effects in an ad-as diagram
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