Explain what happens to output in the short run in each of the following circumstances

Question: #706

Explain what happens to output in the short run in each of the following circumstances:
a) There is deep recession in Europe.
b) Housing values rise above their trend.
c) Mortgage lenders raise interest rates.
d) The government decides to close 20 percent of its military bases around the
country.
e) The long-run interest rate rises.

Solution: #720

Explain what happens to output in the short run in each of the following circumstances

Housing values rise above their trend.
This can have many effects. One effect is that people may want to buy more houses expecting the trend to continue. If this ha...