3 An economys AD curve (the relationship between short run equilibrium output and inflation) is described by the equation Initially the inflation rate is 4 per cent, or 0 04 Potential output, Y , equals 12 000 LO 11 5 HARD a)Find inflation and output in short run equilibrium b)Find inflation and ou...

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3. An economys AD curve (the relationship between short-run equilibrium output and inflation) is described by the

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3. An economy’s AD curve (the relationship between short-run equilibrium output and inflation) is described by the equation: Initially the inflation rate is 4 per cent, or π = 0.04. Potential output, Y*, equals 12 000. LO 11.5 HARD a)Find inflation and output in short-run equilibrium. b)Find inflation and output in long-run equilibrium.

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