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economy GDP is currently 3 trillion dollars, and the price level is 130. PRICE LEVEL 170 110 Changes in a Self-Regulating Economy AD AD₂ SRAS

economy GDP is currently 3 trillion dollars, and the price level is 130. PRICE LEVEL 170 110 Changes in a Self-Regulating Economy AD AD₂ SRAS

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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of The economy of Langoria is currently in a state of long-run equilibrium in which the economy is producing at its Natural Real GDP. The level of Real GDP is currently 3 trillion dollars, and the price level is 130. 100 PRICE LEVEL 170 160 150 140 130 120 110 100 2 Changes in a Self-Regulating Economy AD AD₂ BRAS 1 2 3 LRAS 23
Transcribed Image Text:of The economy of Langoria is currently in a state of long-run equilibrium in which the economy is producing at its Natural Real GDP. The level of Real GDP is currently 3 trillion dollars, and the price level is 130. 100 PRICE LEVEL 170 160 150 140 130 120 110 100 2 Changes in a Self-Regulating Economy AD AD₂ BRAS 1 2 3 LRAS 23
Homework: Classical Macroeconomics and the Self-Regulating Economy (Ch 09) X SRAS LRAS PRICI 130 120 110 100 0 2 3 4 REAL GDP (Trillions of dollars). Suppose there is a sudden increase in government purchases that causes a shift in aggregate demand from AD, to AD₂. As a classical economist from Langoria, you explain that the shift in aggregate demand creates You also explain that will be affected in the short run. You note that such a gap leads to an unemployment rate that is to As wages change, the explain that in the long run, the natural unemployment rate. This means that wages are certain until Real GDP equals Natural Real GDP. Finally, you curve shifts to the will be affected.
Transcribed Image Text:Homework: Classical Macroeconomics and the Self-Regulating Economy (Ch 09) X SRAS LRAS PRICI 130 120 110 100 0 2 3 4 REAL GDP (Trillions of dollars). Suppose there is a sudden increase in government purchases that causes a shift in aggregate demand from AD, to AD₂. As a classical economist from Langoria, you explain that the shift in aggregate demand creates You also explain that will be affected in the short run. You note that such a gap leads to an unemployment rate that is to As wages change, the explain that in the long run, the natural unemployment rate. This means that wages are certain until Real GDP equals Natural Real GDP. Finally, you curve shifts to the will be affected.
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