The economy of Country X has an actual unemployment rate that is less than the natural unemployment rate. a) Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves, and show each of the following: Current Price Level labeled PL1 Current Real Output labelled Y1 Full employment output labeled Yf b) Suppose that investment spending on plant and equipment increases. On your graph in part (a), show the effect of the increase in investment spending on the equilibrium price level and real output in the short run.
The economy of Country X has an actual unemployment rate that is less than the natural unemployment rate. a) Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves, and show each of the following: Current Price Level labeled PL1 Current Real Output labelled Y1 Full employment output labeled Yf b) Suppose that investment spending on plant and equipment increases. On your graph in part (a), show the effect of the increase in investment spending on the equilibrium price level and real output in the short run.
Chapter9: Classical Macro Economics And The Self Regulating Economy
Section: Chapter Questions
Problem 8QP
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The economy of Country X has an actual
a) Draw a correctly labeled graph of the long-run
- Current Price Level labeled PL1
- Current Real Output labelled Y1
- Full employment output labeled Yf
b) Suppose that investment spending on plant and equipment increases. On your graph in part (a), show the effect of the increase in investment spending on the
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