Question

Draw and carefully describe a graph that utilizes the Aggregate Demand/Aggregate Supply model that would illustrate...

Draw and carefully describe a graph that utilizes the Aggregate Demand/Aggregate Supply model that would illustrate the current state of the aggregate economy in the United States.

The graph needs to be clearly labeled and explained carefully. Make sure that the graph includes an aggregate demand (AD) curve, a short run aggregate supply (SRAS) curve, and a long run aggregate supply curve (LRAS, Potential GDP) curve.

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Answer #1

Right not after reducing the taxes for the business in the market and increasing the government expenditure the US economy is facing an inflation in the market and the unemployment is at the lowest. This inflationary gap in the market is unsustainable but it is there for some time. The economy was at the equilibrium point E1 and right now it is at the point E2.

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