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ECO - Consider an economy with the following aggregate demand (AD) and aggregate supply (AS)

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Question;Consider an economy with the following aggregate demand (AD) and aggregate supply (AS) schedules. These schedules reflect the fact that, prior to the period we're examining, decision makers entered into contracts and made choices anticipating that the price level would be P105AD105 Price Level SRAS1055.1 95 3.54.9 100 3.84.7 105 4.24.5 110 4.54.3 115 4.8a. Indicate the quantity of GDP that will be produced and the price level that will emerge during the period.b. Is the economy in long-run equilibrium? Why or why not?c. How will the unemployment rate during the current period compare with this economy's natural rate of unemployment?d. What will tend to happen to resource prices in the future? How will this affect equilibrium rate of output?e. Will the rate of GDP produced during this year be sustainable into the future? Why or why not?

 

Paper#56307 | Written in 18-Jul-2015

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