The graph below shows the AD-AS diagram for Spain. Suppose that the economy is initially in long-run equilibrium with the price level of 900 (Red AD and SRAS curves). Now suppose that the stock market declines sharply. 1200% 1100- 1000 Price Level 900- 800 700- 600* 500 400* 300 200- 100- 100 200 300 400 500 600 700 800 900 1000 1100 120 Real GDP Q As a result of this event, what is the new short-run price level? 4
The graph below shows the AD-AS diagram for Spain. Suppose that the economy is initially in long-run equilibrium with the price level of 900 (Red AD and SRAS curves). Now suppose that the stock market declines sharply. 1200% 1100- 1000 Price Level 900- 800 700- 600* 500 400* 300 200- 100- 100 200 300 400 500 600 700 800 900 1000 1100 120 Real GDP Q As a result of this event, what is the new short-run price level? 4
Chapter1: Making Economics Decisions
Section: Chapter Questions
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