Again, the graph below shows the economy in long-run equilibrium at the expected
ID: 1101499 • Letter: A
Question
Again, the graph below shows the economy in long-run equilibrium at the expected price level of 120 and the natural rate of output of $300 billion, before the increase in consumption spending associated with the stock market expansion. Now show the long-run impact of the stock market boom by shifting both the short-run aggregate demand (AD) curve and the short-run aggregate supply (AS) curve to the appropriate positions. During the transition from the short run to the long run, price level expectations will and the short-run curve will shift to the . In the long run, as a result of the stock market boom, the price level , the quantity of output the natural rate of output, and the unemployment rate the natural rate of unemployment.Explanation / Answer
increase aggregate AD right will increase equal equal