Explore BrainMass

Explore BrainMass

    AS/AD diagram

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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)

    © BrainMass Inc. brainmass.com February 24, 2021, 2:23 pm ad1c9bdddf
    https://brainmass.com/economics/employment/diagram-17359

    Attachments

    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 ...

    Solution Summary

    Draw an AS/AD diagram representing the economy's "before" position in March 2001 and its "after" position in March 2002.

    $2.19

    ADVERTISEMENT