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In the following graph, suppose the Australian economy moves from point A in year 1 to point B in year 2. Using the graph, briefly

In the following graph, suppose the Australian economy moves from pointAin year 1 to pointBin year 2. Using the graph, briefly explain your answers to each of the questions.

(i)What is the growth rate in potential GDP from year 1 to year 2?

(ii)Is the unemployment rate in year 2 higher or lower than in year 1?

(iii)What is the inflation rate in year 2?

(iv)What is the growth rate of real GDP from year 1 to year 2?

LRAS LRAS2 Price level SRAS SRAS2 114 112 AD2 AD 0 $1120 1140 1160 Real GDP (billions of dollars)

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