Consider a hypothetical economy in which the marginal

Last updated: 4/17/2023

Consider a hypothetical economy in which the marginal propensity to consume MPC is 0 8 The following graph shows the aggregate demand curves AD and AD the short run aggregate supply curve SRAS and the long run aggregate supply curve LRAS The economy is currently at point A PRICE LEVEL 140 138 132 128 124 120 116 112 108 200 300 LRAS The economy is currently experiencing AD AD SRAS 124 400 500 600 700 800 REAL GDP Billions of dollars 900 1000 gap of billion