7.AD-SRAS-LRAS Model and Macroeconomic Shocks

(Note:No need to show the diagram here)

Use the AD-SRAS-LRAS model to show graphically how an increase in government spending would impact the macro-economy in the short and long run. Label your initial equilibrium "A", short-run equilibrium "B", and the long-run equilibrium "C". Write a corresponding paragraph explaining the transition of the economy.