Suppose continued terrorist activity forces business firms and government to devote additional resources to law enforcement and military force, causing a permanent reduction in business pro- ductivity. Show the impact in the AD - AS mode! on the long-run level of output and the price level. What is likely to happen to consumption and investment as a result?

Suppose continued terrorist activity forces business firms and government to devote additional resources to law enforcement and military force, causing a permanent reduction in business pro- ductivity. Show the impact in the AD - AS mode! on the long-run level of output and the price level. What is likely to happen to consumption and investment as a result?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter22: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 8P

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