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The graph below shows an economy in long-run equilibrium. Suppose that aggregate demand unexpectedly increases so that the shortrun equilibrium real GDP increases above $80
The graph below shows an economy in long-run equilibrium. Suppose that aggregate demand unexpectedly increases so that the shortrun equilibrium real GDP increases above $80 billion. a. Using the ADAS graph below, demonstrate the new price level and longrun equilibrium real GDP that will result assume that the new classical view of a self-correcting economy is accurate. Instructions: Use the tools provided 'AD2' and 'A52' to plot AD and AS after the increase in aggregate demand and the economy's selfcorrection. Then use the tool provided 'e2' to indicate the new longrun equilibrium point. (D 130 Tools ASLR / / 120 A51 A02 A52 5 110 > 2 ) .2 i 100 90 AD 30 ' (N o 40 so 120 160 200 V Real domestic output (billions of dollars)
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