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The following graph shows an economy in long-run macroeconomic equilibrium. All the usual assumpans of the dynamic demand and supply model hold. Firms and workers
The following graph shows an economy in long-run macroeconomic equilibrium. All the usual assumpans of the dynamic demand and supply model hold. Firms and workers expect there to be a decline in the ination rate in the coming year. Use the line tool to draw three lines: 1) the new LRAS, 2) the new SRAS, and 3) the new AD line in the next y. Properly label each line. Note: if you are not prompted for labels, you have used the wrong drawing tool. Use the point tool to identify the new price level and equilibrium level of real GDP. Label this point '8'. Price level LRASO Real GDP (Y) ADO
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