Emails us- Call US

Assignment help 3907

Consider an economy that is initially in long run equilibrium in the Aggregate Demand and Aggregate Supply (AD-AS) diagram that we covered in lectures. Suppose many Australian firms mistakenly expect that there will be an increase in the relative price of their own products as compared to others (including relative to the input costs and wages they pay). Start with the equilibrium point shown in the Figure below and use it to demonstrate the following changes.

How does this change the aggregate price level, real income and unemployment in the short run? Explain and illustrate in the AD-AS diagram

Explain the adjustment process to long run equilibrium (assuming that real potential output remains unchanged, so no change in LRAS), and what happens to the price level. No need to demonstrate it in Figure but it may be helpful


15% off for this assignment.

Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!

Why US?

100% Confidentiality

Information about customers is confidential and never disclosed to third parties.

Timely Delivery

No missed deadlines – 97% of assignments are completed in time.

Original Writing

We complete all papers from scratch. You can get a plagiarism report.

Money Back

If you are convinced that our writer has not followed your requirements, feel free to ask for a refund.