Consider the figure to the right. Suppose that businesses in this nation initially had been exporting significant amounts of domestically produced goods and services abroad Assume that other nations of the world have experienced a sudden decline in economic conditions. What happens to the nation's aggregate demand curve? In the short run, will the nation experience an inflationary gap or a recessionary gap? Explain 1) Using the line drawing tool, draw a new AD curve that shows the effects of a sudden decline in economic conditions in other nations Label your line AD, 2) Using the point drawing tool. Indicate the economy's new short-run equilibrium price and level of real GDP Label this point E₂ Carefully follow the instructions above, and only draw the required objects In the short run, the equilibrium price level will and the nation will experience gap because the short-run equilibrium level of real GDP per year is real GDP at full employment Price Level * LRAS, Real GDP per Year (Svilions) AS, AD₁

Consider the figure to the right. Suppose that businesses in this nation initially had been exporting significant amounts of domestically produced goods and services abroad Assume that other nations of the world have experienced a sudden decline in economic conditions. What happens to the nation's aggregate demand curve? In the short run, will the nation experience an inflationary gap or a recessionary gap? Explain 1) Using the line drawing tool, draw a new AD curve that shows the effects of a sudden decline in economic conditions in other nations Label your line AD, 2) Using the point drawing tool. Indicate the economy's new short-run equilibrium price and level of real GDP Label this point E₂ Carefully follow the instructions above, and only draw the required objects In the short run, the equilibrium price level will and the nation will experience gap because the short-run equilibrium level of real GDP per year is real GDP at full employment Price Level * LRAS, Real GDP per Year (Svilions) AS, AD₁

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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