Don’t know what to do or how to solve The following graph shows the aggregate demand (AD1) and aggregate supply (AS) curves for a hypothetical economy with Natural Real GDP of $11trillion.PRICE LEVEL13012512011511010510095908.08.5The Simple Keynesian ModelADAS9.09.5 10.0 10.5 11.0 11.5 12.0REAL GDP (Trillions of dollars)AD2+New EqSuppose consumers and businesses become less optimistic about future economic conditions, causing aggregate demand to decrease by a total $1.5trillion at each price level (after all multiplier effects have taken place).On the previous graph, use the green line (triangle symbol) to show the new aggregate demand curve (AD2). Be sure that AD2 is parallel toAD1 (you can mouse over AD₁ to see its slope). Then use the black drop lines (cross symbol) to indicate the new macroeconomic equilibrium afterthe shift of aggregate demand.The decrease in aggregate demand leads to a movement along thelevel to, and the equilibrium level of Real GDP torange of the aggregate supply curve, causing the equilibrium price

Here we are given the aggregate demand and the supply curve. And here the demand curve have shifted…

The following graph shows the aggregate demand (AD1) and aggregate supply (AS) curves for a hypothetical economy with Natural Real GDP of $11 trillion. PRICE LEVEL 130 125 120 115 110 105 The Simple Keynesian Model AD₁ AS A AD2 + New Eq

The following graph shows the aggregate demand (AD1) and aggregate supply (AS) curves for a hypothetical economy with Natural Real GDP of $11 trillion. PRICE LEVEL 130 125 120 115 110 105 The Simple Keynesian Model AD₁ AS A AD2 + New Eq

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter10: Bringing In The Supply Side: Unemployment And Inflation?

Section: Chapter Questions

Problem 3TY

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Question

Don’t know what to do or how to solve

The following graph shows the aggregate demand (AD1) and aggregate supply (AS) curves for a hypothetical economy with Natural Real GDP of $11
trillion.
PRICE LEVEL
130
125
120
115
110
105
100
95
90
8.0
8.5
The Simple Keynesian Model
AD
AS
9.0
9.5 10.0 10.5 11.0 11.5 12.0
REAL GDP (Trillions of dollars)
AD2
+
New Eq
Suppose consumers and businesses become less optimistic about future economic conditions, causing aggregate demand to decrease by a total $1.5
trillion at each price level (after all multiplier effects have taken place).
On the previous graph, use the green line (triangle symbol) to show the new aggregate demand curve (AD2). Be sure that AD2 is parallel to
AD1 (you can mouse over AD₁ to see its slope). Then use the black drop lines (cross symbol) to indicate the new macroeconomic equilibrium after
the shift of aggregate demand.
The decrease in aggregate demand leads to a movement along the
level to
, and the equilibrium level of Real GDP to
range of the aggregate supply curve, causing the equilibrium price

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