Answer the given question with a proper explanation and step-by-step solution. Using the graph, illustrate the long-run impact of the housing market slump by shifting both the aggregate demand (AD) curve and the short-runaggregate supply (AS) curve in the appropriate directions.PRICE LEVEL240200160120804000200400600800OUTPUT (Billions of dollars)ASAD10001200In the long run, due to the housing market slump, the price levelof output, and the unemployment rate| 2 | 2the natural rate.(?), the quantity of outputthe natural level 8. Economic fluctuations IThe following graph shows a hypothetical economy in long-run equilibrium at an expected price level of 120 and a natural output level of $600 billion.Suppose a sudden and severe contraction in the housing market reduces the value of homes and causes consumers to spend less.Using the graph, shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the housingmarket slump.AS160X12080AD400600800OUTPUT (Billions of dollars)PRICE LEVEL240200400020010001200| 2 | 2(?)In the short run, the decrease in consumption spending associated with the housing market contraction causes the price level toprice level people expected and the quantity of output tounemployment rate tothe natural rate of unemployment in the short run.the natural level of output. The housing market slump will cause theAgain, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price level of 120 and natural output levelof $600 billion, prior to the decrease in consumption spending associated with the housing market contraction.Along the transition from the short run to the long run, price-level expectations willcurve will shift to the ▼theand the

Savings are the money that a customer refrains from investing in goods and services. It's money from…

sing the graph, illustrate the long-run impact of the housing market slump by shifting both the aggregate demand (AD) curve and the short-run gregate supply (AS) curve in the appropriate directions. 240 200 160 120 80 40 0 0 200 400 600 800 OUTPUT (Billions of dollars) AS AD 1000 1200 the long run, due to the housing market slump, the price level AD 0 AS (?) , the quantity of output the natural level.