banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time. What happens to the price level and re
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The correct answe is: d) short-run aggregate supply left.
In this regard, one can observe an existing problem of banks that are less able to raise funds and therefore lend less. This cycle leads to less capital inflow, due to the reduced amount of assets in the budget.
Therefore the expected scenario is the behavior of the cumulative curve of the source in the short term moving to the left, due to the decrease in the growth of the investment pattern.
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The correct answer for the question that is being presented above is this one: "C. both after the economy reaches long-run equilibrium during the crisis and in the long-run equilibrium after the crisis is over." When the price level lower compared to its value prior to the crisis, then C. both after the economy reaches long-run equilibrium during the crisis and in the long-run equilibrium after the crisis is over
A) both the price level and real GDP fall
During recessions both the inflation rate (change in general price level) and the real GDP will either stop growing or reduce their growth rate.
Recessions are usually the result of financial crisis, especially the last great recession of 2008 through 2010. Once private consumption starts to fall, the whole economy will slow down dramatically or also fall. Private consumption represents almost 70% of the GDP, so it is by far the largest and most important economic factor.
It wil be manufacturing industrie, (a) hope this you.