The economy is depicted by the graph to the right. It is presently operating at point A.Suppose that the central bank attempts to expand the economy through purchasing US government securities.1.) **Using the line drawing and or the 3-point curved line drawing tools,** show the effect of this shock, assuming the policy is not anticipated by the public. Properly label your new curve or curves.2.) **Using the point drawing tool,** identify the new short-run equilibrium point. Label this point 'H'.Carefully follow the instructions above, and only draw the required objects.**Graph Explanation:**- The graph is a depiction of the economic model with axes representing Price Level (vertical axis) and Real GDP ($ trillions) (horizontal axis).- The **Long-Run Aggregate Supply (LRAS)** is a vertical line, indicating that it does not change with the price level in the long run.- The **Short-Run Aggregate Supply (SRAS)** is an upward sloping curve.- The initial **Aggregate Demand (AD1)** is shown as a downward sloping line intersecting the SRAS.- Point A indicates the current equilibrium where AD1 and SRAS intersect.- Following the central bank's actions, the new aggregate demand curve and the new short-run equilibrium point 'H' are to be identified and marked.- The new Short-Run Aggregate Supply curve (SRAS1) should be shown reflecting the effect of the economic expansion.

The economy is depicted by the graph to the right. It is presently operating at point A. 160- Suppose that the central bank attempts to expand the economy through purchasing US government securities. LRAS 140- 1.) Using the line drawing and or the 3-point curved line drawing tools, show the effect of this shock, assuming the policy is not anticipated by the public. Properly label your new curve or SRAS curves. 120- 2.) Using the point drawing tool, identify the new short-run equilibrium point. Label this point 'H'. ADDA LABEL 100- Carefully follow the instructions above, and only draw the required objects. AD1 80- H 60- SRAS1 40- 4 10 12 14 16 Real GDP ($ trillions) 18 20 Price level

The economy is depicted by the graph to the right. It is presently operating at point A. 160- Suppose that the central bank attempts to expand the economy through purchasing US government securities. LRAS 140- 1.) Using the line drawing and or the 3-point curved line drawing tools, show the effect of this shock, assuming the policy is not anticipated by the public. Properly label your new curve or SRAS curves. 120- 2.) Using the point drawing tool, identify the new short-run equilibrium point. Label this point 'H'. ADDA LABEL 100- Carefully follow the instructions above, and only draw the required objects. AD1 80- H 60- SRAS1 40- 4 10 12 14 16 Real GDP ($ trillions) 18 20 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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