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26-05-2023
Business

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For each scenario listed below, start by drawing a fully-labeled Aggregate Supply-Aggregate Demand diagram of an economy in long-run equilibrium. Then, shift the appropriate curves) - either AD or SRAS - dictated by the events given. Third, identify the short-run and long-run effects of each event on the price level, P and the real
output, Y.
a. The Federal government increases spending on national defense.
b. Suppose that U.S. trading partners (e.g., China or Germany) impose a tax/tariff on US exports to these countries.

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