Answer to Question #242226 in Macroeconomics for michele

Question

aggregrate demand and aggregate supply can be used to analyse the linkage between the monetary and real sectors of the economy. use the AD-AS model to illustrate and explain the impact of the devastating drought on the general price level and the level of real production and income in the economy

Answer 1

When there is drought, the GDP, production and price level and income tends to fall in each economy. The level of production within an economy experiences challenges in maintaining normal level. Drought contributes to a decrease in production within a region this minimizes general exportation within a nation. As the net exports reduces, the aggregate demand for domestic products.