7. Consider a typical aggregate demand and supply curve of an economy operating at its long-run equilibrium. a. Express the condition for long-run equilibrium and graphically show the long- run equilibrium of this economy in an AD-AS diagram. Explain and graphically show how a positive AD shock affects the short-run equilibrium of this economy. How do the price level and rGDP change in the short term as a result? Does the positive AD shock result in a recessionary gap or an inationary gap? Explain and clearly indicate the size of the gap. What does this short-term output gap imply in terms of the rate of usage of factors of production compared to the normal rate indicated by potential output: higher rate of usage or lower than the normal rate? How does rate of usage of factors of production you indicate in part ((1) impact the price of factors of production