Health care is enacted AND paid for at the same time.

That means spending increases (G increases) and revenue increases too (T increases). Show these two independently!!

Now, where is the Actual Real GDP? (Above or below - to the right or left - of the Natural Level of Real GDP)

Unemployment is above or below Full Employment? If Un is below Full employment, then we would expect wages to increase, business costs to increase and the SRAS to shift left.

This is called the "self-correcting" mechanism. No policy is used to "correct" the economy - it slowly corrects on its own as wages and prices adjust.

Hand write and show this whole scenario on a piece of paper - using this example as a guide.

SCENARIOS #2. Suppose WE HAVE A BALANCED A BUDGET INCREASE CAG=AT), SO THAT WE START AT LONG-RUN EQUILIBRIUM. EXPLAIN WHAT HAPPENS IN THE SHORT- RUN FIRST, THEN EXPLAIN THE LONG-Run FINAL Position. LRAS AG 4G SHIFTSAD RIGHT T=) SHIFTS A (MPC-sohe LESS THAN IG) SR: SRAS BRAS2 Price BRASI ABC LEVEL tw AD LEFT TA INCREASES AD3 AD2 JINCREASES W DECREASES AT Ps," - , IPJA -REAL GOP LR. AS YA >Up WAGES RISE, PRICE EXPECTATIONS RISE, BUSINESS COSTS INCREASE SO SRAS SHIFTS LEFT TO SRAS; FINAL POSITION: 21=210; y=40; PINCREASES TO TY SCENARIOS #2. Suppose WE HAVE A BALANCED A BUDGET INCREASE CAG=AT), SO THAT WE START AT LONG-RUN EQUILIBRIUM. EXPLAIN WHAT HAPPENS IN THE SHORT- RUN FIRST, THEN EXPLAIN THE LONG-Run FINAL Position. LRAS AG 4G SHIFTSAD RIGHT T=) SHIFTS A (MPC-sohe LESS THAN IG) SR: SRAS BRAS2 Price BRASI ABC LEVEL tw AD LEFT TA INCREASES AD3 AD2 JINCREASES W DECREASES AT Ps," - , IPJA -REAL GOP LR. AS YA >Up WAGES RISE, PRICE EXPECTATIONS RISE, BUSINESS COSTS INCREASE SO SRAS SHIFTS LEFT TO SRAS; FINAL POSITION: 21=210; y=40; PINCREASES TO TY