Question

Suppose that an economy is initially at the long-run and short-run equilibrium. In the next year,...

Suppose that an economy is initially at the long-run and short-run equilibrium.
In the next year, we observe that the real GDP and the potential GDP remains the same but the price
level has increased.
Which curve(s) in the LRAS-SRAS-AD diagram must have shifted to generate the observation
above? If any of the curves has shifted, state the direction of the shift, propose a factor that leads to
the shift of the curve and state clearly whether the factor has increased or decreased.

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