Now show the long-run impact of the increase in government spending by shifting both theaggregate demand (AD) curve and the short-run aggregate supply (AS) curve to the appropriatepositions.240AS200AD160AS120AD4020040060080010001200OUTPUT (Billions of dollars)In the long run, as a result of the increase in government spending, the price levelthe quantity of outputthe natural level of output, andthe unemployment ratethe natural rate of unemployment.PRICE LEVEL

Answer: Introduction: Due to an increase in government spending demand will increase. As a result,…

Answered: In the long run, as a result of the…

In the long run, as a result of the increase in government spending, the price level , the quantity of output the natural level of output, and the unemployment rate the natural rate of unemployment.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Now show the long-run impact of the increase in government spending by shifting both the
aggregate demand (AD) curve and the short-run aggregate supply (AS) curve to the appropriate
positions.
240
AS
200
AD
160
AS
120
AD
40
200
400
600
800
1000
1200
OUTPUT (Billions of dollars)
In the long run, as a result of the increase in government spending, the price level
the quantity of output
the natural level of output, and
the unemployment rate
the natural rate of unemployment.
PRICE LEVEL

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