I have attached my question as an image. If the image is too small, feel free to enlarge it or pen it in another tab.I am curious to know the reasoning behind your approach. Thank you. **Economic Equilibrium and Business Cycle Analysis****Use the figure below to answer the following question(s):****Figure 10-1**The provided figure illustrates a graph related to the Aggregate Supply and Aggregate Demand model commonly used in macroeconomics. The vertical axis represents the Price Level, while the horizontal axis represents Real GDP (Gross Domestic Product). Several curves and points are marked on the graph:1. **LRAS**: Long-Run Aggregate Supply curve2. **SRAS0**: Short-Run Aggregate Supply curve3. **AD0**: Initial Aggregate Demand curve4. **AD1**: Increased Aggregate Demand curve5. **AD2**: Decreased Aggregate Demand curveThe graph also highlights the following points:- Point A- Point B- Point C- Point D### Questions:**a) At which point in Figure 1-10 is the economy at long-run equilibrium?**- **a. A**- b. B- c. C- d. D*Answer:* At Point A, the economy is at long-run equilibrium, where the Aggregate Demand curve intersects the Long-Run Aggregate Supply curve.**b) At which point in Figure 1-10 is the economy experiencing an economic boom?**- a. A- **b. B**- c. C- d. D*Answer:* At Point B, the economy is experiencing an economic boom, where Aggregate Demand has increased (AD1) and surpassed the Long-Run Aggregate Supply, likely causing higher price levels and real GDP beyond the long-run sustainable rate.**c) At which point in Figure 10-1 is the economy experiencing an economic recession?**- **a. A**- b. B- c. C- d. D*Answer:* At Point C, the economy is experiencing a recession, where Aggregate Demand has decreased (AD2) and is below the Long-Run Aggregate Supply, reflecting a lower price level and real GDP.### Graph Analysis:**Figure 10-1 Explanation:**- **Long-Run Aggregate Supply (LRAS)** remains vertical, indicating that in the long-run, real GDP is determined by resources, technology, and institutions, and is unaffected by price level changes.- **Short-Run Aggregate Supply (SRAS0)** can shift based on various short-term factors such as wages and raw material costs

Real GDP: - it is the inflation-adjusted value of all final goods and services produced in any…

te te fgue belew to e de tiloning quention Figure 101 LRAS SRAS AD AD Real GDP a) At which point in Figure 1-10 is the economy at long-run equilibrium? a. A b. B d. D b) At which point in Figure 1-10 is the economy experiencing an economic boom? a. A b. B C.C d. D c) At which point in Figure 10-1 is the economy experiencing an economic recession? а. А b. B Price level

te te fgue belew to e de tiloning quention Figure 101 LRAS SRAS AD AD Real GDP a) At which point in Figure 1-10 is the economy at long-run equilibrium? a. A b. B d. D b) At which point in Figure 1-10 is the economy experiencing an economic boom? a. A b. B C.C d. D c) At which point in Figure 10-1 is the economy experiencing an economic recession? а. А b. B Price level

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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