1.AS-AD model: Use the figure provided to solve questions below, assuming that Initially, the short- run aggregate supply curve is SAS0 and the aggregate

demand curve is AD0.Some events change aggregate demand from AD0 to

a.AD1. Describe two events that could have created this change in aggregate demand. What is the equilibrium after aggregate demand changed? If potential GDP is unchanged, the economy is at what type of macroeconomic equilibrium?

b.Starting from SAS0 and AD0. Some events change aggregate supply from SAS0 to SAS1. Describe two events that could have created this change in aggregate supply. What is the equilibrium after aggregate supply changed? If potential GDP is unchanged, does the economy have an inflationary gap, a recessionary gap, or no output gap?