Over the past two years there has been a depletion of groundwater in the nation due to severe drought in the country. 1. Which of the two graphs above is correct? Explain why. 2. What happened to real GDP on the selected graph? Why? 3. What happened to the price level on the selected graph? Why? 4. What happened to the aggregate demand and the aggregate supply? Why?

Principles of Economics 2e
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ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter24: The Aggregate Demand/aggregate Supply Model
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Problem 42CTQ: On a microeconomic demand curve, a decrease in price causes an increase in quantity demanded because...
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Over the past two years there has been a depletion of groundwater in the
nation due to severe drought in the country.

1. Which of the two graphs above is correct? Explain why.

2. What happened to real GDP on the selected graph? Why?

3. What happened to the price level on the selected graph? Why?

4. What happened to the aggregate demand and the aggregate supply? Why?

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