The following graph shows the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve for an economy. Suppose the world price of oil decreases rapidly without warning but is not expected to remain at the new low level permanently. However, in the short run, it is less costly for firms to produce goods and services. Illustrate the short-run effect of this change, before any long-run adjustments have taken place, by shifting one or both of the supply curves (SRAS and LRAS) on the following graph. If you do not believe there will be any long-term effects, leave the LRAS in its current position Note: Select and drag one or both of the curves to the desired position, Curves will snap into posibon, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE LEVEL - 240 200 100 8 8 8 SRAS K 12 REAL GOP (Trillions of dolian) SRAS Om LRAS Assume that aggregate demand is unaffected by the oil price drop. After the economy has fully adjusted to the of price drop, the in aggregate output and long-run effect is in the price level,

The following graph shows the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve for an economy. Suppose the world price of oil decreases rapidly without warning but is not expected to remain at the new low level permanently. However, in the short run, it is less costly for firms to produce goods and services. Illustrate the short-run effect of this change, before any long-run adjustments have taken place, by shifting one or both of the supply curves (SRAS and LRAS) on the following graph. If you do not believe there will be any long-term effects, leave the LRAS in its current position Note: Select and drag one or both of the curves to the desired position, Curves will snap into posibon, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE LEVEL - 240 200 100 8 8 8 SRAS K 12 REAL GOP (Trillions of dolian) SRAS Om LRAS Assume that aggregate demand is unaffected by the oil price drop. After the economy has fully adjusted to the of price drop, the in aggregate output and long-run effect is in the price level,

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter9: An Introduction To Basic Macroeconomic Markets

Section: Chapter Questions

Problem 2CQ

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