The graph gives a long-run aggregate supply curve and a short-run aggregate supply curve. Price level (GDP deflator, 2009=100) The quantity of capital increases and the full-employment price level remains constant. Draw the new long-run aggregate supply curve and the new short-run aggregate supply curve. Label the curves. Draw a point at the full-employment price level and the new potential GDP. An increase in potential GDP increases _____ A. long-run aggregate supply but does not increase short-run aggregate supply unless technology advances B. the money wage rate C. the price level D. both long-run aggregate supply and short-run aggregate supply >>> Draw only the objects specified in the question.
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The graph gives a long-run aggregate supply curve (LAS) and a short-run aggregate supply curve (SAS). Show more…
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The graphs illustrate an initial equilibrium for the economy. Suppose that the government cuts taxes. Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and real GDP (or aggregate output) in the short run and in the long run. Short-run graph: LRAS, SRAS, AD Long-run graph: LRAS, SRAS Aggregate price level Aggregate price level Short-run equilibrium Real GDP Real GDP In the short run, the price level stays the same and real GDP increases. In the long run, the price level increases and real GDP increases.
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Short-Run Graph Long-Run Graph LRAS LRAS SRAS AC Short-Run Equilibrium Aggregate Price Level Long-Run Equilibrium AD Real GDP In the short-run, the price level increases. In the long-run, the price level and GDP stay the same. In the long-run, GDP increases.
Using aggregate demand, short-run aggregate supply, and long-run aggregate supply curves, explain the process by which each of the following government policies will move the economy from one long-run macroeconomic equilibrium to another. Illustrate with diagrams. In each case, what are the short-run and long-run effects on the aggregate price level and aggregate output? a. There is an increase in taxes on households. b. There is an increase in the quantity of money. c. There is an increase in government spending.
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