price level vs. output economics graph
Could you please tell me if this is correct?
1. a. Real GDP is less than potential GDP. Show the equilibrium that the economy will reach in the long run if no policy is employed.
b. If the FEd intervenes to bring the economy back to potential GDP, what would they do and where would the new equilibrium be?
a. The AD line would shift to the right back to potential GDP.
b. The new equilibrium would be at potential GDP and would be the same as in part a.
Thank you in advance