Using an aggregate demand and supply diagram, explain how each of the following scenarios affects the equilibrium price level and aggregate output. Consider first the short-run, then the long-run equilibrium for each scenario.
a) Consumers expect a recession, while resource prices rise at the same time.
b) Foreign income falls as domestic technology improves.
c) Foreign price level rises as domestic government cuts taxes.
Hi, I do not need this answered. Just explained in simpler terms. I have read the chapters pertaining to this topic I just don't understand the terms making answering the question hard. aggregate demand and supply diagram? equilibrium? i'm lost