Based on increasing gas prices in the United States. (b) Using the economic fluctuations graph, assume your country is initially in long-run equilibrium. How did the event shift your graph away from long-run equilibrium? Explain which specific factor(s) shifted AD, SRAS, or both, and how they’re related to your event and country. Make sure you explain how price and quantity changed. **Chapter 20: Causes of Economic Fluctuations**- **Assumption:** - Economy begins in long-run equilibrium- **Long-run equilibrium:** - Natural level of output = Q1 - Expected price level = Actual price level = P1 - AD and SRAS fluctuations must return to the long-run equilibrium aggregate supply (LRAS)**Graph Explanation:**The graph illustrates the relationship between the price level and the quantity of output. It includes the following curves:- **LRAS 1 (Long-Run Aggregate Supply):** A vertical line representing the economy's natural level of output at Q1. It shows that in the long run, the quantity of output is determined by factors such as technology and resources, not by the price level.- **AD 1 (Aggregate Demand):** A downward-sloping line that reflects the total demand for goods and services in the economy at various price levels.- **SRAS 1 (Short-Run Aggregate Supply):** An upward-sloping line that illustrates the relationship between the price level and the quantity of output supplied in the short run.The intersection of AD 1 and SRAS 1 at point (Q1, P1) indicates the short-run equilibrium, where the expected and actual price levels are equal, aligning with the natural level of output.

Answered: Image /qna-images/answer/bf77a6fb-967b-4287-b288-3d977a00dea6.jpg

(b). Using the economic fluctuations graph³, assume your country is initially in long- run equilibrium. How did the event shift your graph away from long-run equilibrium? Explain which specific factor(s)4 shifted AD, SRAS, or both, and how they're related to your event and country. Make sure you explain mention how price and quantity changed.

(b). Using the economic fluctuations graph³, assume your country is initially in long- run equilibrium. How did the event shift your graph away from long-run equilibrium? Explain which specific factor(s)4 shifted AD, SRAS, or both, and how they're related to your event and country. Make sure you explain mention how price and quantity changed.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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