Consider an economy that is initially in long-run equilibrium. Assume that the long- run aggregate supply curve is vertical at Y = 3,000 while the short-run aggregate supply curve is horizontal at P = 1.0. The aggregate demand curve is Y= 2(M/P) and M = 1500. Suppose that a supply shock affects the economy in such a way that the price level doubles. Then, the short-run level of output becomes: 1500 3000 1235 1425
Consider an economy that is initially in long-run equilibrium. Assume that the long- run aggregate supply curve is vertical at Y = 3,000 while the short-run aggregate supply curve is horizontal at P = 1.0. The aggregate demand curve is Y= 2(M/P) and M = 1500. Suppose that a supply shock affects the economy in such a way that the price level doubles. Then, the short-run level of output becomes: 1500 3000 1235 1425
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Consider an economy that is initially in long-run equilibrium. Assume that the long-
run aggregate supply curve is vertical at Y = 3,000 while the short-run aggregate
supply curve is horizontal at P = 1.0. The aggregate demand curve is Y= 2(M/P) and
M = 1500. Suppose that a supply shock affects the economy in such a way that the
price level doubles. Then, the short-run level of output becomes:
0000
1500
3000
1235
1425](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5800fca0-3988-48c9-ad83-2c7c1e1d6012%2Fa63b6696-b59b-4e11-9fda-e063070b0236%2Fiofism_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider an economy that is initially in long-run equilibrium. Assume that the long-
run aggregate supply curve is vertical at Y = 3,000 while the short-run aggregate
supply curve is horizontal at P = 1.0. The aggregate demand curve is Y= 2(M/P) and
M = 1500. Suppose that a supply shock affects the economy in such a way that the
price level doubles. Then, the short-run level of output becomes:
0000
1500
3000
1235
1425
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