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. Now suppose that the Aggregate Demand (AD) curve shifts left from AD1 (blue) to AD2 (green). 1200 ADX 1100- 1000 Price Level AD 900 800 79 ST 600- 500- 400 300 200- 100 LRAS 100 200 300 400 500 600 700 800 900 1000 1100 120 Real GDP a 1. What is the new GDP in the short-run as a result of this shift? I 2. What is the new price level in the short-run as a result of this shift? 3. What is the price level in the new long-run equilibrium as a result of this shift?

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. Now suppose that the Aggregate Demand (AD) curve shifts left from AD1 (blue) to AD2 (green). 1200 ADX 1100- 1000 Price Level AD 900 800 79 ST 600- 500- 400 300 200- 100 LRAS 100 200 300 400 500 600 700 800 900 1000 1100 120 Real GDP a 1. What is the new GDP in the short-run as a result of this shift? I 2. What is the new price level in the short-run as a result of this shift? 3. What is the price level in the new long-run equilibrium as a result of this shift?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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