key facts about short-run economic fluctuations

  • Identify the three key facts about short-run economic fluctuations and how the economy in the short run differs from the economy in the long run.
  • Explain economic fluctuations and how shifts in either aggregate demand or aggregate supply can cause booms and recessions using the model of aggregate demand and aggregate supply.
  • Explain how monetary policy affects interest rates and aggregate demand.
  • Analyze how fiscal policy affects interest rates and aggregate demand.
  • Evaluate why policymakers face a short-run trade-off between inflation and unemployment.
  • Evaluate why the inflation-unemployment trade-off disappears in the long run.
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