Question

2. Suppose that a presidential candidate who promised large personal income tax cuts is elected. Use the AD-AS model to predict short-run changes in real GDP and the aggregate price level. Aggregate price level PE ESR SRAS Short-run macroeconomic equilibrium AD YE Real GDP 3. Suppose the economy is in short-run equilibrium. Aggregate price level PE ESR SRAS Short-run macroeconomic equilibrium AD YE Real GDP If commodity prices suddenly increase: a. Use the AD-AS model to predict short-run changes in real GDP and the aggregate price level. b. What economic term can be associated with your previous answer? 4. Potential output is $20,000, and aggregate output is $18,000. a. Calculate the output gap. b. Is the economy in a recessionary gap or an inflationary gap?

          2. Suppose that a presidential candidate who promised large personal income tax cuts is elected.
Use the AD-AS model to predict short-run changes in real GDP and the aggregate price
level.
Aggregate
price
level
PE
ESR
SRAS
Short-run
macroeconomic
equilibrium
AD
YE
Real GDP
3. Suppose the economy is in short-run equilibrium.
Aggregate
price
level
PE
ESR
SRAS
Short-run
macroeconomic
equilibrium
AD
YE
Real GDP
If commodity prices suddenly increase:
a. Use the AD-AS model to predict short-run changes in real GDP and the aggregate price level.
b. What economic term can be associated with your previous answer?
4. Potential output is $20,000, and aggregate output is $18,000.
a. Calculate the output gap.
b. Is the economy in a recessionary gap or an inflationary gap?

2. Suppose that a presidential candidate who promised large personal income tax cuts is elected.
Use the AD-AS model to predict short-run changes in real GDP and the aggregate price
level.
Aggregate
price
level
PE
ESR
SRAS
Short-run
macroeconomic
equilibrium
AD
YE
Real GDP
3. Suppose the economy is in short-run equilibrium.
Aggregate
price
level
PE
ESR
SRAS
Short-run
macroeconomic
equilibrium
AD
YE
Real GDP
If commodity prices suddenly increase:
a. Use the AD-AS model to predict short-run changes in real GDP and the aggregate price level.
b. What economic term can be associated with your previous answer?
4. Potential output is 20,000, and aggregate output is18,000.
a. Calculate the output gap.
b. Is the economy in a recessionary gap or an inflationary gap?

Added by Sebastian S.

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