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Q. Draw Short and Long run agreegate Demand curve and label the axis as well. Thanks

Q. Draw Short and Long run agreegate Demand curve and label the axis as well.

Thanks

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Answer #1

LRAD = long run aggregate demand

SRAD = Short run aggregate demand

LRAS = Long run aggregate supply

SRAS = Short run aggregate supply

Aggregate demand = consumption+Investment+government purchases+ Net exports

With the increase in any of the component in the AD, the AD curve would shift to right as shown in the graph. So to meet this AD, SRAS would shift to right but in the longrun they would adjust to the original levels

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