On the Aggregate Demand Aggregate Supply diagram below, all of the curves are at their correct position, but two of the Equilibriums have been misplaced An economic event has occurred and it is up to you to determine where the new positions of the Equilibriums lay The two misplaced Equilibriums are the Short Run Equilibrium (E 1 ) and Long Run Equilibrium (E 2 ) The original Equilibrium (E 0 ) is in its correct position and does not need to be moved The Event A decrease in consumer wealth driven by falling asset prices has caused a decrease in consumer expenditures The decrease in consumption has caused Aggregate Demand to shift from AD 0 to AD 1 and Short Run Aggregate Supply to shift from SRAS 0 to SRAS 1 , respectively Reposition these points to reflect the change in the economy due to the event described above In order to solve this correctly, you will need to ask yourself For E 1 , how does the shift in AD changethe price level and real GDP in the short run For E 2 , how dothe shifts in AD and SRAS changethe price level and real GDP in the long run To understand the diagram, abbreviation descriptions are provided E 0 original Equilibrium E 1 Short Run Equilibrium ( Keynesian) E 2 Long Run Equilibrium ( Neoclassical) AD 0 original Aggregate Demand curve AD 1 Aggregate Demand curve SRAS 0 original Short Run Aggregate Supply curve SRAS 1 Short Run Aggregate Supply curve LRAS Long Run Aggregate Supply curve Provide your answer below

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Question: On the Aggregate Demand & Aggregate Supply diagram below, all of the curves are at their correct position, but two of the Equilibriums have been

On the Aggregate Demand & Aggregate Supply diagram below, all of the curves are at theircorrectposition, but two of the Equilibriums have beenmisplaced.An economic event has occurred and it is up to you to determine where the new positions of the Equilibriums lay.

The two misplaced Equilibriums are the "Short-Run Equilibrium (E₁)" and "Long-Run Equilibrium (E₂)."
The original Equilibrium (E₀) is in its correct position and does not need to be moved.

The Event:A decrease in consumer wealth driven by falling asset prices has caused a decrease in consumer expenditures. The decrease in consumption has caused Aggregate Demand to shift from"AD₀to AD₁" and Short-Run Aggregate Supply to shift from "SRAS₀to SRAS₁," respectively. Reposition these points to reflect the change in the economy due to the event described above.

In order to solve this correctly, you will need to ask yourself:

For E₁, how does the shift in AD changethe price level and real GDP in theshort-run?
For E₂, how dothe shifts in AD and SRAS changethe price level and real GDP in thelong-run?

To understand the diagram, abbreviation descriptions are provided:

E₀= original Equilibrium
E₁= Short-Run Equilibrium (= Keynesian)
E₂= Long-Run Equilibrium (= Neoclassical)
AD₀= original Aggregate Demand curve
AD₁= Aggregate Demand curve
SRAS₀= original Short-Run Aggregate Supply curve
SRAS₁= Short-Run Aggregate Supply curve
LRAS = Long-Run Aggregate Supply curve

Provide your answer below:

On the Aggregate Demand & Aggregate Supply diagram below, all of the

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