Need explanation how we got 11.5 AD - AS ShocksInflation Rate(percent)LRASAS,AS,HGAD,AD,Aggregate Output,Y($ trillions)On the graph above, suppose point G is on the short - run aggregate supply curve = 2.5 + 2 * (Y - 22) andaggregate demand curve Y = 29.25 - 0.5t. If output at point G is 25, and inflation expectations are adaptive, then theinflation rate next period will beO A. 8.5B. 11.5O C. 2.5O D. 14.5O E. none of the above

Given the supply curve equation = π = 2.5 +2× (Y-22) Aggregate demand curve equation = Y=29.25 -0.5π…

On the graph above, suppose point G is on the short- run aggregate supply curve x = 2.5 + 2* (Y - 22) and aggregate demand curve Y = 29.25 - 0.5x. If output at point G is 25, and inflation expectations are adaptive, then the inflation rate next period will be

On the graph above, suppose point G is on the short- run aggregate supply curve x = 2.5 + 2* (Y - 22) and aggregate demand curve Y = 29.25 - 0.5x. If output at point G is 25, and inflation expectations are adaptive, then the inflation rate next period will be

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 36RQ: How is pressure for inflationary price increases shown in an AD/AS model?

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Question

Need explanation how we got 11.5

AD - AS Shocks
Inflation Rate
(percent)
LRAS
AS,
AS,
H
G
AD,
AD,
Aggregate Output,
Y($ trillions)
On the graph above, suppose point G is on the short - run aggregate supply curve = 2.5 + 2 * (Y - 22) and
aggregate demand curve Y = 29.25 - 0.5t. If output at point G is 25, and inflation expectations are adaptive, then the
inflation rate next period will be
O A. 8.5
B. 11.5
O C. 2.5
O D. 14.5
O E. none of the above

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