Starting from the Short Run Equilibrium shown on your 1st diagram (2020), show graphicallyhow the Automatic Mechanism will move the economy to a new Long-Run Equilibrium. Label Explain the changes in your diagram. Be very specific. If you shift a curve, explain If you move along a curve, explain why. The answer is in the PPT. GDP Deflator116.1Key points:LRAS202101YA 19.2 Yº= 19.7SRAS₁AD₁Real GDP (Trillions of $)The LRAS curve is a vertical line at the level of potential GDP, Yº = $19.7 T.The AD curve is downward sloping.The SRAS curve is upward sloping.Both AD and SRAS are drawn so that they cross the LRAS curve (but they do not intersect on the LRAS curve).Since actual Real GDP is less than Potential GDP (YA

In terms of its potential to ease economic downturns through government involvement, Keynesianism…

Answered: Starting from the Short Run Equilibrium…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Starting from the Short Run Equilibrium shown on your 1^st diagram (2020), show graphicallyhow the Automatic Mechanism will move the economy to a new Long-Run Equilibrium. Label

Explain the changes in your diagram. Be very specific. If you shift a curve, explain If you move along a curve, explain why. The answer is in the PPT.

GDP Deflator
116.1
Key points:
LRAS202101
YA 19.2 Yº= 19.7
SRAS₁
AD₁
Real GDP (Trillions of $)
The LRAS curve is a vertical line at the level of potential GDP, Yº = $19.7 T.
The AD curve is downward sloping.
The SRAS curve is upward sloping.
Both AD and SRAS are drawn so that they cross the LRAS curve (but they do not intersect on the LRAS curve).
Since actual Real GDP is less than Potential GDP (YA <YP), the intersection of the AD and SRAS curves must be to
the left of the LRAS curve.
The point (YA Plis (192 116 1)

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