The following graph shows several aggregate demand and

Last updated: 4/11/2023

The following graph shows several aggregate demand and aggregate supply curves for an economy whose potential output is 4 trillion The curves are labeled a b c and d Three points on the graph are also indicated by grey stars and labeled X V and Z PRICE LEVEL 160 150 AD 140 130 120 110 100 90 80 D Description LRAS O Identify which curve on the previous graph corresponds to each of the following descriptions If the curve described is not shown on the graph choose Not Shown In the descriptions AD represents aggregate demand SRAS represents short run aggregate supply LRAS represents long run aggregate supply 2 3 4 6 REAL GDP Trillions of dollars SRAS if the expected price level is 120 SRAS if the expected price level is 140 SRAS if the expected price level is 110 a O O b O 7 000 C O O O d Not Shown O 00 O 00000 Suppose the economy is currently in short run equilibrium at point Z In this case the economy is producing at an output level potential output At current prices and wage levels real wages are to the its what firms and workers expected when they agreed on wage