Use the AD/AS model to diagram the following events, showing what will happen in the short run and in the long run. Unless otherwise instructed, assume that each economy starts from full employment. Also, state clearly what will happen to output and the price level in the short run and in the long run.

A. New laws prohibit a large segment of the labor force from working.

Technological advances allow one worker to do the work of ten.

Question

Use the AD/AS model to diagram the following events, showing what will happen in the short run and in the long run. Unless otherwise instructed, assume that each economy starts from full employment. Also, state clearly what will happen to output and the price level in the short run and in the long run.

A.	New laws prohibit a large segment of the labor force from working. 


Technological advances allow one worker to do the work of ten.