Question: I need to check my work, so please answer all six questions. Draw an AD/AS graph to explain the impact of government spending increases on

I need to check my work, so please answer all six questions.

Draw an AD/AS graph to explain the impact of government spending increases on prices, real output, and employment in the short run and in the long run.

1. Label the X-axis Real GDP and the Y-axis Price Level.

2. Draw and label the AD curve and AS curve on your graph, and label the equilibrium Point A.

3. Show the shift in aggregate demand due to an increase in government spending, and label the new equilibrium Point B.

4. Draw and label the long-run AS curve.

5. What does the long-run AS supply curve in question 4 mean.

6. How is the natural rate of unemployment illustrated in this AD/AS model?

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