Consider the AS/AD model. Moreover, suppose the economy is in Short-Run and Long-Run equilibrium. a. Illustrate the economy in an (x,y) plane where rgdp is on the horizontal axis and the price level is on the vertical axis

Consider the AS/AD model. Moreover, suppose the economy is in Short-Run and Long-Run equilibrium. a. Illustrate the economy in an (x,y) plane where rgdp is on the horizontal axis and the price level is on the vertical axis

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter10: Aggregate Demand And Supply

Section10.A: The Self Correcting Aggregate Demand And Supply Model

Problem 10SQ

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Question

Consider the AS/AD model. Moreover, suppose the economy is in Short-Run and Long-Run equilibrium.
a. Illustrate the economy in an (x,y) plane where rgdp is on the horizontal
axis and the price level is on the vertical axis

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Short-run equilibrium: Negative(Recession) output gap

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Short-run equilibrium: Positive(Inflationary) output gap

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Long-run equilibrium:

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