Economics practice problem 2

Homework: ASSESS Chapter 11 Homework core: 0 of 1 pt 8 of 9 (6 complete) Text Problem 11-17 Consider the figure to the right. Suppose that the real interest rate suddenly declines for reasons that have nothing to do with the value of the price level. What happens to the nation's aggregate demand curve? In the short run, will the nation experience an inflationary gap or a recessionary gap? Explain. 1.) Using the line drawing tool, draw a new AD curve that shows the effects of a sudden fall in the real interest rate. Label your line 'AD2.' LRAS1 2.) Using the point drawing tool, indicate the economy's new short-run equilibrium price and level of real GDP. Label this point 'E2.' AS1 Carefully follow the instructions above, and only draw the required objects. Price Level AD1 Real GDP per Year ($ trillions) Selected: Delete Clear none Click the graph, choose a tool in the palette and follow the instructions to create your graph