The graphs illustrate an initial equilibrium for the economy. Suppose that the Federal Reserve raises interest rates. Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Aggregate price level Short-run graph LRAS In the short run, the price level GDP Real GDP SRAS Short-run equilibrium, AD and Aggregate price level Long-run graph LRAS SRAS Long-run equilibrium, * AD GDP Real GDP In the long run, the price level and

The graphs illustrate an initial equilibrium for the economy. Suppose that the Federal Reserve raises interest rates. Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Aggregate price level Short-run graph LRAS In the short run, the price level GDP Real GDP SRAS Short-run equilibrium, AD and Aggregate price level Long-run graph LRAS SRAS Long-run equilibrium, * AD GDP Real GDP In the long run, the price level and

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter23: Aggregate Demand And Aggregate Supply

Section23.3: The Aggregate Demand Curve

Problem 3QQ

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