00:01
So although it doesn't say it, i want to approach this through the lens of an aggregate demand, aggregate supply model.
00:06
So let's draw one, right? because i think that's the underlying framework that you're going to be using to answer this question.
00:13
P and y, aggregate supply and aggregate demand.
00:18
The key thing here is that output is the inverse of unemployment.
00:24
So a high output means a low unemployment.
00:27
In a, a positive supply shock, i mislabeled these, excuse me.
00:35
Long day over here.
00:37
A, the positive supply shock is shifting out.
00:41
So in a, we would expect output to go up.
00:43
And so we would have unemployment go down.
00:46
So a is not the right answer.
00:49
For b, a positive demand shock, we would be having aggregate demand shift out, right? so b, we're moving up this way, which also means that output is going to go up, which means that unemployment is going to go down...