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Using the graph, shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the increase in government spending. PRICE LEVEL 240 200 160 120 + 80 40 0 0 200 400 600 800 OUTPUT (Billions of dollars) AS AD 1000 1200 AD 0 AS In the short run, the increase in government spending on infrastructure causes the price level to he quantity of output to the price level people expected and the natural level of output. The increase in government spending will cause the unemployment rate to the natural rate of unemployment in the short run. gain, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price level of 120 and natural output level f $600 billion, prior to the increase in government spending on infrastructure. long the transition from the short run to the long run, price-level expectations will THE TO and the

Using the graph, shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the increase in government spending. PRICE LEVEL 240 200 160 120 + 80 40 0 0 200 400 600 800 OUTPUT (Billions of dollars) AS AD 1000 1200 AD 0 AS In the short run, the increase in government spending on infrastructure causes the price level to he quantity of output to the price level people expected and the natural level of output. The increase in government spending will cause the unemployment rate to the natural rate of unemployment in the short run. gain, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price level of 120 and natural output level f $600 billion, prior to the increase in government spending on infrastructure. long the transition from the short run to the long run, price-level expectations will THE TO and the

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please answer everything in the photos including the graph.
The following graph shows a hypothetical economy in long-run equilibrium at an expected price level of 120 and a natural output level of $600 billion. Suppose the government increases spending on building and repairing highways, bridges, and ports. Using the graph, shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the increase in government spending. PRICE LEVEL 240 200 160 120 80 ++ 40 0 0 200 400 600 800 OUTPUT (Billions of dollars) AS AD 1000 1200 AD AS In the short run, the increase in government spending on infrastructure causes the price level to the quantity of output to the price level people expected and the natural level of output. The increase in government spending will cause the unemployment rate to the natural rate of unemployment in the short run. Again, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price level of 120 and natural output level of $600 billion, prior to the increase in government spending on infrastructure. Along the transition from the short run to the long run, price-level expectations will curve will shift to the and the
Transcribed Image Text:The following graph shows a hypothetical economy in long-run equilibrium at an expected price level of 120 and a natural output level of $600 billion. Suppose the government increases spending on building and repairing highways, bridges, and ports. Using the graph, shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the increase in government spending. PRICE LEVEL 240 200 160 120 80 ++ 40 0 0 200 400 600 800 OUTPUT (Billions of dollars) AS AD 1000 1200 AD AS In the short run, the increase in government spending on infrastructure causes the price level to the quantity of output to the price level people expected and the natural level of output. The increase in government spending will cause the unemployment rate to the natural rate of unemployment in the short run. Again, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price level of 120 and natural output level of $600 billion, prior to the increase in government spending on infrastructure. Along the transition from the short run to the long run, price-level expectations will curve will shift to the and the
Using the graph, illustrate the long-run impact of the increase in government spending by shifting both the aggregate demand (AD) curve and the short-run aggregate supply (AS) curve in the appropriate directions. PRICE LEVEL 240 200 160 120 80 40 0 0 200 + 600 400 800 OUTPUT (Billions of dollars) AS AD 1000 1200 O AD ***** AS In the long run, due to the increase in government spending, the price level natural level of output, and the unemployment rate the natural rate. the quantity of output I the
Transcribed Image Text:Using the graph, illustrate the long-run impact of the increase in government spending by shifting both the aggregate demand (AD) curve and the short-run aggregate supply (AS) curve in the appropriate directions. PRICE LEVEL 240 200 160 120 80 40 0 0 200 + 600 400 800 OUTPUT (Billions of dollars) AS AD 1000 1200 O AD ***** AS In the long run, due to the increase in government spending, the price level natural level of output, and the unemployment rate the natural rate. the quantity of output I the
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