An economy is operating at its medium-run equilibrium. It then experiences a sudden, large increase in autonomous investment. Within the combined wage-setting/price-setting (WS-PS) and multiplier model framework, which of the following describes the immediate, short-run sequence of events?

An economy, initially at its medium-run equilibrium, experiences a positive demand shock, such as a surge in consumer confidence. Arrange the following events in the correct chronological order to describe the economy's short-run adjustment to this boom.

Analyzing a Government-Led Economic Expansion

In the combined wage-setting/price-setting and multiplier framework, an economic boom is initiated when a firm's decision to hire more workers leads to an increase in aggregate demand and output.