Question
I am having trouble with this homework problem: Draw a correct AD and AS graph to show the following (assuming the economy is operating above
I am having trouble with this homework problem: Draw a correct AD and AS graph to show the following (assuming the economy is operating above full employment:)
1) Identify the The LRAS curve: this would mean the SRAS curve is to the right of the LRAS curve, or ye is to the right of yfe, correct?
2) Identify current price level and output levels (PLe and Ye) these align with the SRAS curve, correct?
3) Label the full employment output level - this is the LRAS curve, right?
4) Identify one fiscal policy that could resolve the problem: The problem is that operating above full employment is unsustainable so gov't could increase business taxes?
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