A central bank forecasts a rise in raw material costs. The government plans to increase spendingon health and education.The initial equilibrium point is shown by X on the aggregate demand, AD, and aggregate supply,AS, diagram.What would be the new equilibrium point in the short run if the forecasts prove to be accurate andthe government plans are implemented?AS,AS2generalpricelevelASBAAD, AD AD,real outputC.

AS curve shifts when the factors affecting aggregate supply changes. It will shift to right when the…

Answered: the new equilibrium point in the short…

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Economics

the new equilibrium point in the short run

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter8: Macroeconomic Equilibrium: Aggregate Demand And Supply

Section: Chapter Questions

Problem 12E

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Question

A central bank forecasts a rise in raw material costs. The government plans to increase spending
on health and education.
The initial equilibrium point is shown by X on the aggregate demand, AD, and aggregate supply,
AS, diagram.
What would be the new equilibrium point in the short run if the forecasts prove to be accurate and
the government plans are implemented?
AS,
AS2
general
price
level
AS
B
A
AD, AD AD,
real output
C.

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