The figure below is a part of the AD-AS model as a description of the current...

 

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The figure below is a part of the AD-AS model as a description of the current situation of an economy. PA=$10 c) d) P YA=4000 Y a) Find the short-run equilibrium (i.e. the real output and the price level thereof) of this economy. (4 marks) b) If the natural level of output is 3500, which one will be higher, the unemployment rate at point A, or the natural unemployment rate? Explain. (4 marks) Give two reasons as to why the short-run aggregate supply is upward sloping. (4 marks) Suppose the government takes no action about the situation indicated above. Explain, with the help of a figure properly labeled, what will happen in this economy in the long (7 marks) run. e) Describe the two kinds of macroeconomic policies that can be used in the situation described before part c). Indicate clearly in your description whether each policy is to affect the aggregate demand or aggregate supply or both. Further, give reason(s) as to why the government may want to use these policies rather than doing nothing. (6 marks) The figure below is a part of the AD-AS model as a description of the current situation of an economy. PA=$10 c) d) P YA=4000 Y a) Find the short-run equilibrium (i.e. the real output and the price level thereof) of this economy. (4 marks) b) If the natural level of output is 3500, which one will be higher, the unemployment rate at point A, or the natural unemployment rate? Explain. (4 marks) Give two reasons as to why the short-run aggregate supply is upward sloping. (4 marks) Suppose the government takes no action about the situation indicated above. Explain, with the help of a figure properly labeled, what will happen in this economy in the long (7 marks) run. e) Describe the two kinds of macroeconomic policies that can be used in the situation described before part c). Indicate clearly in your description whether each policy is to affect the aggregate demand or aggregate supply or both. Further, give reason(s) as to why the government may want to use these policies rather than doing nothing. (6 marks)