Question

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

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

Homework Answers

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.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Applying the AD/AS Model (please use graph a long with your answer) Consider the following two...
Applying the AD/AS Model (please use graph a long with your answer) Consider the following two events (i) Growth Surges in East Asia (ii) A sharp increase in oil price Use the AD-AS model to explain the seperate effects of each event on real GDP and the price level, starting from long-run equilibrium
4. The long-run effect of Federal Reserve action (or inaction)in the AD-AS model The following graph...
4. The long-run effect of Federal Reserve action (or inaction)in the AD-AS model The following graph shows the short-run aggregate supply (SRASSRAS) and aggregate demand (ADAD) curves for a fictional economy that is producing at point A (grey star symbol), which corresponds to the intersection of the AD1AD1 and SRAS1SRAS1 curves. No InterventionIntervention6789101112131414013012011010090807060PRICE LEVELQUANTITY OF OUTPUT (Trillions of dollars)SRAS2SRAS1AD2AD1LRASA According to the graph, actual output of this economy is   than potential output, which means that the economy experiences   . Along...
In the Four-Graph macroeconomic long-run model (labor market, aggregate production function, diagonal line to shift Y,...
In the Four-Graph macroeconomic long-run model (labor market, aggregate production function, diagonal line to shift Y, and AD-AS), what does it say about output and employment?
3. An economy is initially at a long run equilibrium (GE). A. On the AD-AS graph,...
3. An economy is initially at a long run equilibrium (GE). A. On the AD-AS graph, show the AD, LRAS and SRAS curves/lines. Label this “A” B. The Central Bank (Federal Reserve) increases the money supply. Give one action the Fed can take to increase the money supply.       _________________________________ Show how this changes the AD-AS graph. Label the curve/line that shifts with a “2” and label the new equilibrium “B”       There is no additional policy action: C. Show...
Using the AD-AS model, show and explain how long-run real output (potential GDP) be affected by...
Using the AD-AS model, show and explain how long-run real output (potential GDP) be affected by a financial crisis.
Consider the AD-AS model, with the AD curve derived from the quantity theory of money. Suppose...
Consider the AD-AS model, with the AD curve derived from the quantity theory of money. Suppose the economy is initially in long-run equilibrium, when there is a sudden rise in demand for real balances for any given level of output, and simultaneously also an improvement in productive technology that permanently increases how much firms can produce with any given amount of the factors of production. (a) Immediately following these shocks, what happens to velocity? To the AD curve? The LRAS...
What would happen in the short-run and long-run to C, I, G, NX, AD, AS, P,...
What would happen in the short-run and long-run to C, I, G, NX, AD, AS, P, Q, inflation and economic growth if the Federal Reserve Bank increased the money supply? Make sure to include the 4 tools for how they would increase the money supply and how this would impact 1) interest rates (include a money graph) and 2) inflation and output (using the AD/AS graph.)
Illustrate the model of a perfectly competitive firm that is in long-run equilibrium. Your graph should...
Illustrate the model of a perfectly competitive firm that is in long-run equilibrium. Your graph should have the demand curve facing the firm, price, MR, MC, and ATC. Identify the optimal level of output. What is the firm’s profit in the long-run?
in the dynamic model of AD-AS, the economy is in . long run equilibrium in year...
in the dynamic model of AD-AS, the economy is in . long run equilibrium in year 1 and is expected to be in short-run equilibrium bellow potential GDP in year 2, and the federal reserve pursues the appropriate policy, because policy will work more quickly than the automatic adjustment mechanism this will result in. A) real GDP lower than what would occur if no policy had been pursued. B) unemployment rates higher than what would occur if no policy had...
in the dynamic model of AD-AS, the economy is in . long run equilibrium in year...
in the dynamic model of AD-AS, the economy is in . long run equilibrium in year 1 and is expected to be in short-run equilibrium bellow potential GDP in year 2, and the federal reserve pursues the appropriate policy, because policy will work more quickly than the automatic adjustment mechanism this will result in. A) real GDP lower than what would occur if no policy had been pursued. B) unemployment rates higher than what would occur if no policy had...