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a graph of a long run equilbruim in as / ad model ??

a graph of a long run equilbruim in as / ad model ??

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Answer #1

Following graph is the long run equilibrium which is obtained by the intersection of aggregate demand (AD) and long run aggregate supply (LRAS). LRAS curve is vertical which shows that output can not be exceeded after that level and all resources are employed at this point. In the graph SRAS is the short run aggregate supply curve which has positive slope showing positive relationship between price level and real output in the short run. The equilibrium price is P and output is Y.

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