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Question: The following events occur that influence the economy of Toughtimes:  i A deep recession hits the...

Show transcribed image text The following events occur that influence the economy of Toughtimes: i A deep recession hits the world economy. ii Oil prices rise sharply. iii Businesses expect huge losses in the near future. a Explain the separate effects of each of these events on real GDP and the price level in Toughtimes, starting from a position of long-run equilibrium. b Explain the combined effects of these events on real GDP and the price level in Toughtimes, starting from a position of long-run equilibrium. c Explain what the Toughtimes government and central bank can do to overcome the problems faced by the economy.

The following events occur that influence the economy of Toughtimes: i A deep recession hits the world economy. ii Oil prices rise sharply. iii Businesses expect huge losses in the near future. a Explain the separate effects of each of these events on real GDP and the price level in Toughtimes, starting from a position of long-run equilibrium. b Explain the combined effects of these events on real GDP and the price level in Toughtimes, starting from a position of long-run equilibrium. c Explain what the Toughtimes government and central bank can do to overcome the problems faced by the economy.