7. Draw the long-run aggregate supply curve when potential GDP is $17.5 trillion. Label it. As we move up along the long-run aggregate supply curve, A. the prices of goods and services increase and the mo OB. the money wage rate remains constant OC. the real wage rate remains constant D. the prices of goods and services remain constant 135- 125- 115- 105- 95- 85- Price level (GDP deflator, 2009=100) 75- 16.5 17.0 17.5 18.0 18.5 19.0 Real GDP (trillions of 2009 dollars) >>> Draw only the objects specified in the question. 19.5

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PRICE LEVEL a a" a" LRAS Y, Y₂ QUANTITY OF OUTPUT 8 a. rising price level and a falling level of output, as the economy moves to point A. b. falling price level and a falling level of output, as the economy moves to point C. c. falling price level and a rising level of output, as the economy moves to point A O d. rising price level and a rising level of output, as the economy moves to point C. SRAS, SRAS Refer to Figure 34-3. Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a AD

Figure 34-3 PRICE LEVEL a a a LRAS Y, Y₂ QUANTITY OF OUTPUT SRAS. SRAS. AD Refer to Figure 34-3. Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a falling price level and a falling level of output, as the economy moves to point C. falling price level and a rising level of output, as the economy moves to point A. rising price level and a falling level of output, as the economy moves to point A. Orising price level and a rising level of output, as the economy moves to point C.