Price Level P₁ 0 O O व AS₂ AS₁ B P3 and real output will be Q1. O P₁ and real output will be Q₁. O P2 and real output will be Q1. P2 and real output will be Q1. AD₁ Q3 Q₁ Q₂ Real Domestic Output AD ₂ Refer to the graph. Assume that the economy is initially at equilibrium at point A and the economy is at full employment. If there is an expansion in the economy and AD₁ shifts to AD2, and wages and prices are flexible, then in the long run the price level will be

Price Level P₁ 0 O O व AS₂ AS₁ B P3 and real output will be Q1. O P₁ and real output will be Q₁. O P2 and real output will be Q1. P2 and real output will be Q1. AD₁ Q3 Q₁ Q₂ Real Domestic Output AD ₂ Refer to the graph. Assume that the economy is initially at equilibrium at point A and the economy is at full employment. If there is an expansion in the economy and AD₁ shifts to AD2, and wages and prices are flexible, then in the long run the price level will be

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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