u/Efficient_Moment_548

Es gibt auch eine Aufgabe b, daher musste ich denke ich den Hinweis mit dem kompakten Intervall bei der a noch nicht nutzen.

At the beginning AS and AD curves intersect at Y(0) and pi(0).

Now lets say goverment expenditure G decreases.

G dec. -> demand Z dec. -> Output Y dec. (AD curves shifts to the left, and the new point B is at the same inflation rate but lower output Y)

My question is now how you explain the movement from the point B to the real new intersection point C.

Does it work like that?:

At B there is a surplus of supply, which leads to a higher price (from microeconomics) P dec. -> Inflation pi dec. (because of the definition of inflation) -> interest rate i dec. (taylor rule) -> investments I inc. and so does Y.

I know the process doesnt end here, but is it right until now?