7. Answer and explain

7 . Economic fluctuations 1 The following graph shows the economy in long-run equilibrium at the expected price laval of 120 and the natural laval of cutput of $600 billion. Supportn the economics of several foreign countries experiance rapidly growing incomes, causing foreign spending on domestic goods and services to Shift the short-run agunigate supply (45) curve or the agonize demand (AD) curve to show the short run impact of the canoninc prosperity AD AS PRICE LEVEL QUIPUI (Bike of dolan) In the short run, the increase in foreign spending on domestic goods associated with expansion abroad causes the price laval in 7 the price livid people expected and the quantity of output ba the natural laval of cutpul. The economic prosperity abroad will carie that unemployment rate to the natural rate of unemployment in the short run. Again, the following graph shows the economy in long-run equilibrium at the expected price laval of 120 and the natural laval of output of $600 billion, before the increase in foreign spending on domestic goods associated with expansion abroad. During the transition from the short run to that long run, price-laval expectations mill 7 and the 7 curve will shift to the Now show what long run impact of the aconantic prosperity abroad by shifting both the sugnights downand (AD) curves and the short-nat aggregate supply (45) curve to the appropriate positions. (?) AD AS PRICE LEVEL OUTPUT Bikes of dollar) In the long run, as a result of the sconemic prosperity abroad, the price level 7 , the quantity of output 7 the natural kivel of cutpul, and the urkimplayand rate the natural rate of unimplaymenil