Step 1: States of the Economy The following graph shows the aggregate demand curve (AD), the short-run aggregate supply curve (SRAS), and the long-run aggregate supply curve (LRAS) of an economy. PRICE LEVEL 180 160 140 120 100 AD SRAS 20 Real GDP and Natural Real GDP LRAS ° 9 10 REAL GDP (Trillions of dollars) The short-run equilibrium output level is $5 trillion, $8 trillion, $6 trillion, $7 trillion and the economy is operating exists in the labor market of this economy. at a long-run equilibrium, in an inflationary gap, or with a recessionary gap equilibrium, a surplus, or a Step 2: Two shortage As a result, Consider the following scenario: The economy is in an inflationary gap, producing an output of $7 trillion, which is greater than the Natural Real GDP of $5 trillion, The following graph shows two production possibilities frontiers (PPFS) for the economy. The PPF doser to the origin (blue curve) is the economy's institutional PPF, and the PPF farther from the origin (purple curve) is the economy's physical PPF. Place the grey point (star symbol) on one of the black points (plus symbol) to indicate the state of the economy when it is operating at the short- run equilibrium described above. 10 Physical PPF 9 Institutional PPF + Two PPFs GOOD X (Thousands of units) 89 State of Economy In time, wages and costs of production will likely rise, fall, or remain the same Do graph please and thank you
Step 1: States of the Economy The following graph shows the aggregate demand curve (AD), the short-run aggregate supply curve (SRAS), and the long-run aggregate supply curve (LRAS) of an economy. PRICE LEVEL 180 160 140 120 100 AD SRAS 20 Real GDP and Natural Real GDP LRAS ° 9 10 REAL GDP (Trillions of dollars) The short-run equilibrium output level is $5 trillion, $8 trillion, $6 trillion, $7 trillion and the economy is operating exists in the labor market of this economy. at a long-run equilibrium, in an inflationary gap, or with a recessionary gap equilibrium, a surplus, or a Step 2: Two shortage As a result, Consider the following scenario: The economy is in an inflationary gap, producing an output of $7 trillion, which is greater than the Natural Real GDP of $5 trillion, The following graph shows two production possibilities frontiers (PPFS) for the economy. The PPF doser to the origin (blue curve) is the economy's institutional PPF, and the PPF farther from the origin (purple curve) is the economy's physical PPF. Place the grey point (star symbol) on one of the black points (plus symbol) to indicate the state of the economy when it is operating at the short- run equilibrium described above. 10 Physical PPF 9 Institutional PPF + Two PPFs GOOD X (Thousands of units) 89 State of Economy In time, wages and costs of production will likely rise, fall, or remain the same Do graph please and thank you
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
TOPIC: The labor market and the three states of the economy
Transcribed Image Text:Step 1: States of the Economy
The following graph shows the aggregate demand curve (AD), the short-run aggregate supply curve (SRAS), and the long-run aggregate supply
curve (LRAS) of an economy.
PRICE LEVEL
180
160
140
120
100
AD
SRAS
20
Real GDP and Natural Real GDP
LRAS
°
9
10
REAL GDP (Trillions of dollars)
The short-run equilibrium output level is
$5 trillion, $8
trillion, $6 trillion,
$7 trillion
and the economy is operating
exists in the labor market of this economy.
at a long-run
equilibrium, in an
inflationary gap, or with
a recessionary gap
equilibrium, a surplus, or a
Step 2: Two shortage
As a result,
Consider the following scenario: The economy is in an inflationary gap, producing an output of $7 trillion, which is greater than the Natural Real
GDP of $5 trillion,
The following graph shows two production possibilities frontiers (PPFS) for the economy. The PPF doser to the origin (blue curve) is the economy's
institutional PPF, and the PPF farther from the origin (purple curve) is the economy's physical PPF.
Place the grey point (star symbol) on one of the black points (plus symbol) to indicate the state of the economy when it is operating at the short-
run equilibrium described above.
10
Physical PPF
9
Institutional PPF
+
Two PPFs
GOOD X (Thousands of units)
89
State of Economy
In time, wages and costs of production will likely rise, fall, or remain the same
Do graph
please and
thank you
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