In this discussion board contribution, your task tothink more carefully and applied concerning the Aggregate Demandand Aggregate Supply framework. Suppose that for somereason, there is a fall in Aggregate Demand from a position that areflected long-run full employment output (the “natural rate ofunemployment”).
If this decrease in Aggregate Demand had beenanticipated by all market participants, would there be anynegative affects on the levels of aggregate output and employment,and why? How would the required adjustments have comeabout? But suppose that there is an unanticipatedincrease in Aggregate Demand, what will be theshort-run and long run effects – why and through whatchanges?
In both the anticipated and unanticipated situations,what would happen to the general price level inthese processes?
