Aggregate demand function was Y=3300-3P last year, current year it looks like Y=3390-3P. SRAS curve is horizontal. Potential GDP is $3000 bln and it hasn't changed. Find out equilibrium GDP in the short-run and inflation rate in the long-run. Using AD-AS model illustrate the task.

Aggregate demand function was Y=3300-3P last year, current year it looks like Y=3390-3P. SRAS curve is horizontal. Potential GDP is $3000 bln and it hasn't changed. Find out equilibrium GDP in the short-run and inflation rate in the long-run. Using AD-AS model illustrate the task.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 9E

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Question

Aggregate demand function
was Y=3300-3P last year, current year it looks like
Y=3390-3P. SRAS curve is horizontal. Potential GDP is $3000 bln and it hasn't
changed.
Find out equilibrium GDP in the short-run and inflation rate in the long-run.
Using AD-AS model illustrate the task.

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