Question:
AD and LRAS Diagram -AD Shifts to the Right. Explain what has Happened and will happen?
Author: eric_galvaoAnswer:
-AD2 will have the Same Equilibrium Point at the Same Output of the Old Equilibrium ,but just at a Higher Price -This is because the LRAS is the Maximum Output the Economy can Produce. So all that happens is Demand Pull Inflation occurs -Unemployment also doesn't Exist since being on the LRAS means there is no Spare Capacity in the Economy
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