The table below shows the aggregate equilibrium for the country of Nickeltown. Aggregate Data Year Nickeltown Potential Aggregate Output Current Aggregate Output Price Level 2002 2003 in billions 400 300 In 2002, Nickeltown experienced a ORecessionary gap OInflationary gap in billions 300 90 200 95 OPotential equilibrium What would be an appropriate action for the government of Nickeltown to take? ORaise taxes OIncrease government spending ONothing

The economy is in long run equilibrium. Congress’s passage of new laws significantly increasing the regulation of business. It is assumed that everything else stays constant. What do we expect in aggregate demand, short run aggregate supply aggregate supply in short run?   And what happens in long run, and long run equilibrium price level and output?    Explicitly state what happens to equilibrium price level and output in both short run and long run and how economy corrects from short run to long run.

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Please no written by hand solution Assume that the potential GDP of the economy of Arion is $1,160, and that the aggregate demand and aggregate supply are as shown in the following table. Aggregate Quantity Demanded 1 Aggregate Quantity Demanded 2 Price Index Aggregate Quantity Supplied $1,240 96 $1,000 1,220 97 1,040 1,200 98 1,080 1,180 99 1,120 1,160 100 1,160 1,140 101 1,200 1,120 102 1,240 1,100 103 1,270 1,080 104 1,300 1,060 105 1,330 a. The value of equilibrium real GDP is and the price level is . There is (Click to select) gap. The gap is equal to $ . b. If firms become more optimistic and aggregate demand increases by $60, complete the aggregate demand 2 column in the table above. c. The new value of equilibrium real GDP is and the price level is now . d. There is (Click to select) gap. The gap is equal to $ .