Question
Aggregate demand curve of an economy is given by AD = 51 - 0.2P, the long-run aggregate supply, LRAS, is 30 and the short-run aggregate
Aggregate demand curve of an economy is given by AD = 51 - 0.2P, the long-run aggregate supply, LRAS, is 30 and the short-run aggregate supply is given by SRAS = 0.3 P (all output measures are in US$ billions and the price level is given as an index number).
a. What is the equilibrium price level?b. What is the actual short-run output? c. What is the output gap? d. What could be the unemployment rate if the natural rate of unemployment is 5%?
Assume that the present status of the economy is the result of a supply shock.
e. What could be the original equilibrium (price level and output)? f. What will be the new long-run equilibrium without any policy action? g. What will be the aggregate demand curve when the labor market adjusts?
Just need E, F and G please
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