The accompanying graphs illustrate an initial equilibrium for the economy. Suppose that oil prices increase temporarily. Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short-run and the long-run, as well as the short-run (Egg) and long-run (ELR) equilibria resulting from this change. Then answer what happens to the inflation rate and GDP.
The accompanying graphs illustrate an initial equilibrium for the economy. Suppose that oil prices increase temporarily. Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short-run and the long-run, as well as the short-run (Egg) and long-run (ELR) equilibria resulting from this change. Then answer what happens to the inflation rate and GDP.
Chapter8: Macroeconomic Equilibrium: Aggregate Demand And Supply
Section: Chapter Questions
Problem 19E
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![The accompanying graphs illustrate an initial equilibrium for the economy. Suppose that oil prices increase temporarily.
Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run
aggregate supply (LRAS) in both the short-run and the long-run, as well as the short-run (ESR) and long-run (ELR) equilibria
resulting from this change. Then answer what happens to the inflation rate and GDP.
Inflation rate
Economy in the Short Run
SR.
LRAS
Real GDP
SRAS
AD
Inflation rate
Economy in the Long Run
E
LRAS
LR.
Real GDP
AD
SRAS](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd25a324e-60b4-4d34-8d18-3b0e781c8fc5%2Fa51e37c9-42c7-4ef4-8c36-01966774b7d2%2Fmjtbny_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The accompanying graphs illustrate an initial equilibrium for the economy. Suppose that oil prices increase temporarily.
Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run
aggregate supply (LRAS) in both the short-run and the long-run, as well as the short-run (ESR) and long-run (ELR) equilibria
resulting from this change. Then answer what happens to the inflation rate and GDP.
Inflation rate
Economy in the Short Run
SR.
LRAS
Real GDP
SRAS
AD
Inflation rate
Economy in the Long Run
E
LRAS
LR.
Real GDP
AD
SRAS
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