Explore BrainMass

Explore BrainMass

    Long-Run Equilibrium Price Level

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

    Consider the situation:

    A country's long-run equilibrium price level has increased, but the position of its aggregate demand schedule has changed.

    You need to answer the following questions:
    ?What has led to the country's increase in the long-run equilibrium price level and the change in the position of its aggregate demand schedule?
    ?What specific factors might have accounted for this event?
    Explain by giving reasons.

    © BrainMass Inc. brainmass.com October 9, 2019, 8:45 pm ad1c9bdddf

    Solution Preview

    In the AD-AS model if the AD curve shifts to the right this will cause a higher equilibrium price level. There are several things that can shift the AD curve. 1) expansionary monetary policy: if the Fed lowers rates then people spend more so consumption and ...

    Solution Summary

    Long-Run Equilibrium Price Level is considered.