Price Level The graph below shows the AD-AS diagram for Norway. Suppose that the economy is initially in long-run equilibrium with the price level of 900. Now suppose that the Aggregate Demand (AD) curve shifts left from AD1 (blue) to AD2 (green). 1200 ADX 1100- 1000 ADX 900 800 700 SRASI 600 500- 400- 300 200- 100 LRAS 100 200 300 400 500 600 Real GDP 700 800 900 1000 1100 120 What is the new price level in the short-run as a result of this shift? Price Level The graph below shows the AD-AS diagram for Spain. Suppose that the economy is initially in long-run equilibrium with the price level of 800. Now suppose that the Aggregate Demand (AD) curve shifts left from AD1 (blue) to AD2 (green). 1200+ 1100 1000 ADX 900 800 ADX 700 SRASI 600 500 400 300 200 100 100 LRAS 200 300 400 500 600 700 800 900 1000 1100 120 Real GDP What is the price level in the new long-run equilibrium as a result of this shift? Price Level The graph below shows the AD-AS diagram for Brazil. Suppose that the economy is initially in long-run equilibrium with the price level of 800. Now suppose that the Aggregate Demand (AD) curve shifts left from AD1 (blue) to AD2 (green). 1200 ADX 1100- 1000 ADX 900- 800 700- 600- 500 SRASI 400 300 200 100- LRAS 100 200 300 400 500 600 Real GDP 700 800 900 1000 1100 120 a What is GDP in the new long-run equilibrium as a result of this shift? Price Level The graph below shows the AD-AS diagram for Mexico. Suppose that the economy is initially in long-run equilibrium with the price level of 900 (Red AD and SRAS curves). Now suppose that consumers become pessimistic. 1200 1100 1000 900 800 700 600* 500 400 300 200 100 100 200 300 400 500 600 700 Real GDP 800 900 1000 1100 120 As a result of this event, what is the new short-run price level? Price Level The graph below shows the AD-AS diagram for the US. Suppose that the economy is initially in long-run equilibrium with the price level of 800 (Red AD and SRAS curves). Now suppose that households decide to save a larger share of their income. 1200 1100- 1000 900 800 700- 600 500 400 300 2007 100- 100 200 300 400 500 600 Real GDP 700 800 900 1000 1100 120 As a result of this event, what is the new short-run GDP?