Suppose that M = 2000 and that k = 2. What is the price level P at which the economy is in long-run- equilibrium? Plot such an equilibrium on a diagram with P on the vertical axis and Y on the horizontal axis, by distinguishing between the short-run and the long-run equilibrium. Suppose that the economy's long-run output level is produced according to the followingproduction function:Y = AK1/2L1/2and that A = 5, K = 400 and L = 100.

An economy is said to be in equilibrium where AS(aggregate supply) and AD(aggregate demand) are…

Answered: Suppose that M = 2000 and that k = 2.…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that M = 2000 and that k = 2. What is the price level P at which the economy is in long-run- equilibrium? Plot such an equilibrium on a diagram with P on the vertical axis and Y on the horizontal axis, by distinguishing between the short-run and the long-run equilibrium.

Suppose that the economy's long-run output level is produced according to the following
production function:
Y = AK1/2L1/2
and that A = 5, K = 400 and L = 100.

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