3. The graph below shows the AD-AS model for the US in long-run equilibrium. Label both axes and the following: AD, SRAS, LRAS. Indicate the equilibrium price level is P, and equilibrium level of output is Yo. IX Assume that due to an expansion in European economics, US exports to that region increase. A. Show the effects of this change in the graph above. B. What happens to the SR equilibrium price level and level of output (Real GDP)? Label these P₁ and Y₁. C. Initially, what happens to real wages? D. What happens to the unemployment rate? E. Given your answer to parts C and D, how might workers respond? F. Show the effects of the change described in part E in the graph above. Label the new equilibrium price leve and level of output as P2 and Y₂. G. After this transition to the LR equilibrium, what is the level of output (Y2) as compared to the initial level (Yo)?

3. The graph below shows the AD-AS model for the US in long-run equilibrium. Label both axes and the following: AD, SRAS, LRAS. Indicate the equilibrium price level is P, and equilibrium level of output is Yo. IX Assume that due to an expansion in European economics, US exports to that region increase. A. Show the effects of this change in the graph above. B. What happens to the SR equilibrium price level and level of output (Real GDP)? Label these P₁ and Y₁. C. Initially, what happens to real wages? D. What happens to the unemployment rate? E. Given your answer to parts C and D, how might workers respond? F. Show the effects of the change described in part E in the graph above. Label the new equilibrium price leve and level of output as P2 and Y₂. G. After this transition to the LR equilibrium, what is the level of output (Y2) as compared to the initial level (Yo)?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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