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11 Exhibit 3-1 PL P SRAS LRAS AD Y Y* GDPR Refer to Exhibit 3-1. The economy is currently producing at level Y. If an economist believes the economy (itself) can move to Y*, then he believes that the economy will likely stay "stuck" in short-run equilibrium. SRAS curve will shift rightward and intersect the AD curve. O AD curve will shift rightward and intersect the SRAS curve. LRAS curve will shift leftward until it intersects the SRAS and AD curves at Y.

11 Exhibit 3-1 PL P SRAS LRAS AD Y Y* GDPR Refer to Exhibit 3-1. The economy is currently producing at level Y. If an economist believes the economy (itself) can move to Y*, then he believes that the economy will likely stay "stuck" in short-run equilibrium. SRAS curve will shift rightward and intersect the AD curve. O AD curve will shift rightward and intersect the SRAS curve. LRAS curve will shift leftward until it intersects the SRAS and AD curves at Y.

MACROECONOMICS
MACROECONOMICS
14th Edition
ISBN:9781337794985
Author:Baumol
Publisher:Baumol
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section: Chapter Questions
Problem 2TY
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11 Exhibit 3-1 PL P SRAS LRAS AD Y Y* GDPR Refer to Exhibit 3-1. The economy is currently producing at level Y. If an economist believes the economy (itself) can move to Y*, then he believes that the economy will likely stay "stuck" in short-run equilibrium. SRAS curve will shift rightward and intersect the AD curve. O AD curve will shift rightward and intersect the SRAS curve. LRAS curve will shift leftward until it intersects the SRAS and AD curves at Y.
Transcribed Image Text:11 Exhibit 3-1 PL P SRAS LRAS AD Y Y* GDPR Refer to Exhibit 3-1. The economy is currently producing at level Y. If an economist believes the economy (itself) can move to Y*, then he believes that the economy will likely stay "stuck" in short-run equilibrium. SRAS curve will shift rightward and intersect the AD curve. O AD curve will shift rightward and intersect the SRAS curve. LRAS curve will shift leftward until it intersects the SRAS and AD curves at Y.
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