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In the short-run, the price level and In the long-run, the price level and GDP GDP

In the short-run, the price level and In the long-run, the price level and GDP GDP

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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The graphs illustrate an initial equilibrium for the economy. Suppose that oil prices temporarily decrease. Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Short-run graph Long-run graph LRAS LRAS SRAS SRAS Short-ryn equilibrium Long-run equilibrium AD AD Real GDP Real GDP Aggregate price level Aggregate price level
Transcribed Image Text:The graphs illustrate an initial equilibrium for the economy. Suppose that oil prices temporarily decrease. Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Short-run graph Long-run graph LRAS LRAS SRAS SRAS Short-ryn equilibrium Long-run equilibrium AD AD Real GDP Real GDP Aggregate price level Aggregate price level
Short-run graph Long-run graph LRAS LRAS SRAS SRAS Short-ryn equilibrium Long-run equilibrium AD AD Real GDP Real GDP In the short-run, the price level and In the long-run, the price level and GDP GDP Aggregate price level Aggregate price level
Transcribed Image Text:Short-run graph Long-run graph LRAS LRAS SRAS SRAS Short-ryn equilibrium Long-run equilibrium AD AD Real GDP Real GDP In the short-run, the price level and In the long-run, the price level and GDP GDP Aggregate price level Aggregate price level
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