Aggregate price level The graphs illustrate an initial equilibrium for the economy. Suppose that the stock market broadly increases. 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 and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and real GDP (or aggregate output) in the short run and in the long run. Short-run graph Real GDP LRAS SRAS Short-run equilibrium AD Aggregate price level Long-run graph LRAS SRAS Real GDP Long-run equilibrium AD
Aggregate price level The graphs illustrate an initial equilibrium for the economy. Suppose that the stock market broadly increases. 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 and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and real GDP (or aggregate output) in the short run and in the long run. Short-run graph Real GDP LRAS SRAS Short-run equilibrium AD Aggregate price level Long-run graph LRAS SRAS Real GDP Long-run equilibrium AD
Chapter1: Making Economics Decisions
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Transcribed Image Text:Aggregate price level
The graphs illustrate an initial equilibrium for the economy. Suppose that the stock market broadly increases.
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 and long-run equilibriums resulting
from this change. Then, indicate what happens to the price level and real GDP (or aggregate output) in the short run and in the
long run.
Short-run graph
Real GDP
LRAS
SRAS
Short-run equilibrium
AD
Aggregate price level
Long-run graph
LRAS
SRAS
Real GDP
Long-run equilibrium
AD
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