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hi guys and welcome to cult nameks my name is Paul Hanley and today Im going to be chatting to you about optimum currency theory in this video we are going to examine the implications of an asymmetric shock involving two countries in a common currency area the asymmetric shock in this case will affect Ireland as a positive aggregate demand side shock so more spending for goods and services and in the French case it will be a negative shock so in Ireland we will have an increase in aggregate demand so this will increase whereas in France the aggregate demand curve for French goods and services is going to decrease so how do we model this and what are the implications well to model thats what we will do is we will draw our new aggregate demand curve in your case where a great demand shifts right words in our economy here and we will just put this in as a d1 so this represents a positive increase in the demand for goods and services this will generate a new equilibrium point short-run w
