The table below shows the initial aggregate demand, short-run, and long-run aggregate supply schedules - Price level Aggregate demand (billion $) Aggregate Supply (billion $) Long run Aggregate supply (billion $) 80 1600 400 800 90 1400 600 800 100 1200 800 800 110 1000 1000 800 120 800 1200 800 130 600 1400 800 140 400 1600 800
The table below shows the initial aggregate demand, short-run, and long-run
|
|
Aggregate demand (billion $) |
Aggregate Supply (billion $) |
Long run Aggregate supply (billion $) |
|
80 |
1600 |
400 |
800 |
|
90 |
1400 |
600 |
800 |
|
100 |
1200 |
800 |
800 |
|
110 |
1000 |
1000 |
800 |
|
120 |
800 |
1200 |
800 |
|
130 |
600 |
1400 |
800 |
|
140 |
400 |
1600 |
800 |
a. Draw the AD, SAS, and LAS curves, show the equilibrium level of real
b. What is the value of Potential GDP?
c. What is the value of short run
d. What is the value of short run macroeconomics
e. Is the country producing above, below or at full employment?
f. What is the name of the gap if any?
g. What is the size of the gap?
h. Is there positive or negative cyclical
i. Do you have to Increase or decrease GDP?
j. Should the country implement expansionary or contractionary policy?
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