5. Assume that the economy of Meekland is in a long-run equilibrium with a balanced government...

Transcribed Image Text:

5. Assume that the economy of Meekland is in a long-run equilibrium with a balanced government budget. (a) Using a correctly labeled graph of aggregate supply and aggregate demand, show each of the following. (i) Long-run aggregate supply (ii) The output level, labeled YE, and the price level, labeled PLE (b) Assume consumer confidence falls. Show on your graph in part (a) the short-run impact of the change in consumer confidence and label the new equilibrium price level and output Y1 and PL1, respectively. (c) Using a correctly labeled graph of the short-run and long-run Phillips curves, show the effect of the fall in 5. Assume that the economy of Meekland is in a long-run equilibrium with a balanced government budget. (a) Using a correctly labeled graph of aggregate supply and aggregate demand, show each of the following. (i) Long-run aggregate supply (ii) The output level, labeled YE, and the price level, labeled PLE (b) Assume consumer confidence falls. Show on your graph in part (a) the short-run impact of the change in consumer confidence and label the new equilibrium price level and output Y1 and PL1, respectively. (c) Using a correctly labeled graph of the short-run and long-run Phillips curves, show the effect of the fall in

Answer rating: 100% (QA)

a Graph of Aggregate Supply and Aggregate Demand i Longrun aggregate supply LRAS The LRAS curve is a ... View the full answer