Price Level LRAS (GDP Deflator 2005 = 100) SRAS: SRAS ? 8 D A AD AD 0 Real GOP (2005 Billions USD) Using the above graph, which of the following points (A

Economics Nov 07, 2020

Price Level LRAS (GDP Deflator 2005 = 100) SRAS: SRAS ? 8 D A AD AD 0 Real GOP (2005 Billions USD) Using the above graph, which of the following points (A.B.D.C) can represent the long-term equilibrium of the economy. your answer is A enter the letter A. if it is A and B. Enter AB (pay attention to the space between the two points when entering your answer)

Expert Solution

Long run equilibrium = A and C

Reason- Long run equilibrium occurs where AD= SRAS =LRAS

This happens at point A and Point C only.

Point B and Point D are short run equilibrium.c

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