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1. Suppose the economy is in long run equilibrium. What happens to inflation and GDP (increase or decrease) if investment spending increases in the

1. Suppose the economy is in long run equilibrium. What happens to inflation and GDP (increase or decrease) if investment spending increases in the economy? Draw the shift in the graph below. Inflation GDP Inflation LRAS curve SRAS AD Real GDP growth rate 2. Suppose the economy is in long run equilibrium. What happens to inflation and GDP if there is a decrease in the labor force? Draw the shift in the graph below. Inflation GDP Inflation LRAS curve SRAS AD Real GDP growth rate

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