Please answer all questions showing full explanation

Topic 3.6- Changes in the AD-AS Model in the Short Run Price Use the graph to the right to answer the following questions Level LRAS SRAS (assume that each event takes places independently) 1. What is the short-run equilibrium price level and output? PL 2. Identify the short-run equilibrium price level and output if PL., consumption increased? 3. Identify the short-run equilibrium price level and output after a negative supply shock? PL. 4. What happens to output and unemployment if investment falls? PL 5. Use the graph to explain the difference between demand-pull and costs-push inflation. AD Y , Y 3 YA GDP 6. What is a negative supply shock? 9. Define deflation. 7. What is a positive supply shock? 10. What is autonomous consumption? 8. Define stagflation. 11. What is disposable income? Topic 3.7- Long-run Self-Adjustment 1. Explain how the economy 3. Assuming wages and resource prices are flexible, show how each economy self-adjusts in the long run below will self-adjust in the long run. when there is a negative output Economy #1 Economy #2 gap. Price Level SRAS PL1 2. Explain how the economy self-adjusts in the long run when there is a positive output gap. YF RGDP RGDP Y 1 YF Y2 4. Assume instead that Economy #2 experiences economic growth. What happens to LRAS and output? 5. Does the natural rate of unemployment increase, decrease, or stay the same when the LRAS shifts right