The graph below shows the AD-AS diagram for Brazil. Suppose that the economy is initially in long-run equilibrium with the price level of 800 (Red AD and SRAS curves). Now suppose that the federal government decreases spending. 1200t ASI AS2 1100 1000 900 800 700 600 500 400 S 300- 200 100 AD2 400 S00 60 700 к00 900 1000 1100 120 AD1 100 2al GDP Price Level
The graph below shows the AD-AS diagram for Brazil. Suppose that the economy is initially in long-run equilibrium with the price level of 800 (Red AD and SRAS curves). Now suppose that the federal government decreases spending. 1200t ASI AS2 1100 1000 900 800 700 600 500 400 S 300- 200 100 AD2 400 S00 60 700 к00 900 1000 1100 120 AD1 100 2al GDP Price Level
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
What is the new short-run
What is the new short-run
What is the new Long-run price level?
What is the new long-run GDP?
![The graph below shows the AD-AS diagram for Brazil.
Suppose that the economy is initially in long-run equilibrium with the price level of 800 (Red AD
and SRAS curves).
Now suppose that the federal government decreases spending.
1200+
AS1
AS2
T100
1000
900
800
700
600
500-
400
300-
200-
100
AD2
AD1
100 200
300. 400 500 600
"Reat GDP
700 800 900 1000 1100 126.
Price Level](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F97c3fc3a-732b-43a4-a7a0-3b9aaca763ae%2F38f149f2-cf01-40ff-b1f6-f8b61c2d104e%2F4mhrufg_processed.png&w=3840&q=75)
Transcribed Image Text:The graph below shows the AD-AS diagram for Brazil.
Suppose that the economy is initially in long-run equilibrium with the price level of 800 (Red AD
and SRAS curves).
Now suppose that the federal government decreases spending.
1200+
AS1
AS2
T100
1000
900
800
700
600
500-
400
300-
200-
100
AD2
AD1
100 200
300. 400 500 600
"Reat GDP
700 800 900 1000 1100 126.
Price Level
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