In the following graph, suppose that the economy moves from point A in year 1 to point
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In the following graph, suppose that the economy moves from point A in year 1 to point B in year 2. Using the graph, briefly explain your answer to each of the questions.
a. What is the growth rate in potential GDP from year 1 to year 2?
b. Is the unemployment rate in year 2 higher or lower than in year 1?
c. What is the inflation rate in year 2?
d. What is the growth rate of real GDP in year 2?
Transcribed Image Text:
LRAS1 LRAS2 SRAS, Price level (GDP deflator, 2009 = 100) SRAS2 114 112 AD2 AD, $17.4 17.6 17.8 Real GDP (trillions of 2009 dollars)
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