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Attem 2.5 Average 2151 0 A) in the AD-AS model corresponds to the intersection s The following graph shows Kgrey starsymbol Di and SPAS, Curves LRAS BRAS No Intervention Fed Intervene PRICE LEVEL AD AD, REAL GDP (Trillions of dollars) Since real GDP is currently $14 trillion Evel of potential output means there is currently Mong SRASI. s would have sed on an expected price level of Since the actual price level at point a is 145, this means that real wages are_ had been negotiated, which will unemployment. If the Fed does not intervene, these labor market conditions would cause nominal wages to shining the curve to the Eventually , the economy would reach a new long-run equilibrium. On the previous graph, use the tan point (dash symbol) to indicate the long-ri brium output and price level if the Fed does not intervene. Assure there are no feedback effects on the curve that does not shin.) Now suppose the Fed choose vene in an effort to move the ery more quickly back to its potential output. To do so, the Fed will the money supply, which will the interest re reby giving firms an incentive to investment, shifting the curve to the On the previous graph, place the black point um output and price level if the Fed intervenes in this way and successfully brings the economy back to long-run equilt ack effects on the curve that does not shift.) Compare your answers from the previous few conorny will likely have relatively high w . On the other hand, if the Fed does ively high w , if it changes the money supply too much. Grade It Now Save & Continue Continue without saving Type here to search O