Essay
Suppose the potential level of real GDP for a hypothetical economy is $250 and the price level (P) initially is 100.Use the following short-run aggregate supply schedules below to answer the questions. 
(a) What will be the short-run level of real GDP if the price level rises unexpectedly from 100 to 110 because of an increase in aggregate demand? Falls unexpectedly from 100 to 90 because of a decrease in aggregate demand? Explain each situation.(b) What will be the long-run level of real GDP when the price level rises from 100 to 110? Falls from 100 to 90? Explain each situation.
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(a) In the short run, real GDP will rise...View Answer
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