Name Hula yoim AD-AS Short-Run and Long-Run Quiz (30 points) 1. Start in Long-Run Equilibrium ( Label "A") and move the economy to a bubble/ expansionary period. Label the new equilibrium point "B". LOAS SRAS R PL KGOP A. What happens to price level, output, unemployment, real wages and nominal wages in the short run (use up/down arrows)? 1. Price Level- 1 2. Output- 1 3. Unemployment (explain why) (2pts) - Inverse to real output 4. Real Wages (explain why (2pts) ) - If price level rises, realwages decrease due to their inverse relation and 5. Nominal Wages (explain why) -- Sticky" Nominal wages are always "Stickgin SRAS due to the Sticky wage Therery B. If the government chooses NOT to intervene, graph what will happen to the economy in Figure A. Label the new equilibrium point "C". C. What happens to price level, output, unemployment, real wages and nominal wages in the long run? 1. Price Level- 2 . Output - RNR 3. Unemployment-NR 4. Real Wages (explain why for this and all real variables (2pts))- RNR because 5. Nominal Wages (explain why (2pts) ) - If price levelapes down, nominal wages andown too in long - run. because people can be payed less and have alpral Is concurrent lowered prices