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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

A rise in aggregate demand raises Real GDP and the price level. Draw the aggregate supply curve that is consistent with this statement. Next, a rise in aggregate demand raises the price level but leaves Real GDP unchanged. Draw the aggregate supply curve that is consistent with that statement.

To determine

Graphical illustration of aggregate supply curve.

Explanation

Figure 1 shows the short run aggregate supply (SRAS) curve.

In figure 1, the vertical axis measures price level and the horizontal axis measures real GDP. The upward sloping curve is the short run aggregate supply curve. The positively sloped or upward sloping aggregate supply shows an increase price level and real GDP of the country. Increase in aggregate demand will increase the price level. At higher price, the producer will increase supply of goods, this in turn increases the real GDP of the country...

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