Using the graph, shift the short-run aggregate supply (AS) c or the aggregate demand (AD) curve to show the short- run impact of the increase in government spending. PRICE LEVEL 240 200 160 80 40 0 200 400 600 800 OUTPUT (Billions of dollars) AS AD 1000 1200 AD AS In the short run, the increase in government spending on infrastructure causes the price level to the price leve the people expected and the quantity of output to natural level of output. The increase in government spendi will cause the unemployment rate to unemployment in the short run. the natural rate Again, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price lev of 120 and natural output level of $600 billion, prior to the
Using the graph, shift the short-run aggregate supply (AS) c or the aggregate demand (AD) curve to show the short- run impact of the increase in government spending. PRICE LEVEL 240 200 160 80 40 0 200 400 600 800 OUTPUT (Billions of dollars) AS AD 1000 1200 AD AS In the short run, the increase in government spending on infrastructure causes the price level to the price leve the people expected and the quantity of output to natural level of output. The increase in government spendi will cause the unemployment rate to unemployment in the short run. the natural rate Again, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price lev of 120 and natural output level of $600 billion, prior to the
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter8: Understanding Markets And Industry Changes
Section: Chapter Questions
Problem 8.2IP
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The following graph shows a hypothetical economy in long-run equilibrium at an expected price level of 120 and a natural output level of $600 billion. Suppose the government increases spending on building and repairing highways, bridges, and ports.
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