Short-run graph Long-run graph LRAS LRAS SRAS SRAS Short-run equilibrium Long-run equilibrium AD Real GDP Real GDP Aggregate price level In the short-run, the price level In the long-run, the price level and and increases increases GDP GDP decreases decreases increases increases stays the same stays the same decreases decreases stays the same stays the same
Short-run graph Long-run graph LRAS LRAS SRAS SRAS Short-run equilibrium Long-run equilibrium AD Real GDP Real GDP Aggregate price level In the short-run, the price level In the long-run, the price level and and increases increases GDP GDP decreases decreases increases increases stays the same stays the same decreases decreases stays the same stays the same
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter9: Classical Macroeconomics And The Self Regulating Economy
Section9.3: The Self Regulating Economy
Problem 3ST
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The graphs illustrate an initial equilibrium for the economy. Suppose that the government increases spending.
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
explain the second image as well and which is right.
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