2. Please use a graph to produce aggregate supply in classical model under the assumption of nominal wage or money wage.

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Homework: Chapter 09 PRICE LEVEL 140 135 130 125 120 115 110 105 100 0 Changes in a Self-Regulating Economy 1 AD2 SRAS AD₁ LRAS 6 2 3 4 5 REAL GDP (Trillions of dollars) 8 Suppose there is a sudden decrease in government purchases that causes a shift in aggregate demand from AD; to AD₂. As a classical economist from Langoria, you explain that the shift in aggregate demand creates . You also explain that will be affected in the short run. You note that such a gap leads to an unemployment rate that is to ▼ As wages change, the explain that in the long run, the natural unemployment rate. This means that wages are certain until Real GDP equals Natural Real GDP. Finally, you curve shifts to the will be affected. MacBook Pro X A-Z A+

Economics 8