Question: Consider the information provided in the following graph for the Saskland economy. LAS 140 130 SAS Price level (GDP deflator, 1997 = 100) 120 110

Consider the information provided in the following graph for the Saskland economy. LAS 140 130 SAS Price level (GDP deflator, 1997 = 100) 120 110 100 In the long run, 90 money wage adjusts AD O 900 950 1,000 1,050 1,100 1,150 Real GDP (billions of 1997 dollars)1. What are the equilibrium levels of GDP and price in the short-run? 2. What are the equilibrium levels of GDP and price in the long-run? 3. Suppose all firms expect to earn higher profit next year. What would happen to GDP and Price in the short-run? Show it on the graph

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