AS/AD diagram
Not what you're looking for?
Assume the economy in March 2001 was exactly at full employment. Draw an AS/AD diagram representing the economy's "before" position in March 2001 and its "after" position in March 2002. Make sure your diagram illustrates a simultaneous increase in RGDP and the unemployment rate, with little overall change in the price level. Explain any shifts in your AS, AD and full-employment potential output lines. (example AS/AD diagram is attached)
Purchase this Solution
Solution Summary
Draw an AS/AD diagram representing the economy's "before" position in March 2001 and its "after" position in March 2002.
Solution Preview
** Please see the attached file for the complete solution response **
The intercept of AD1 and AS is the economy before / in March 2001.
The intercept of AD2 and AS is the economy after / in March 2002.
There's a 2.5% increase in RGDP in the economy, which is shown by the right shift of AD curve. Because of the increase in AD, the price ...
Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.