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Question: suppose a firm is currently producing 900 computers per week...

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Suppose a firm is currently producing 900 computers per week and charging a price of $1,200 per computer. a. Show how the firm will respond to a negative demand shock if prices are flexible. Instructions: Use the tool provided 'S Flexible Prices' to draw the supply curve when prices are flexible. Then use the tool provided 'D Negative Shock' to draw the shift in the aggregate demand curve when there is a negative demand shock. b. Generalizing from the computer market specifically to the economy as a whole, what will happen when this negative demand shock occurs across the economy's many markets? Real GDP will stay the same, prices will decrease, and unemployment will increase. Real GDP will stay the same, prices will decrease, and unemployment will stay the same. Real GDP will decrease, prices will increase, and unemployment will increase. Real GDP will increase, prices will increase, and unemployment will decrease.

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