The Fehmarnbelt Tunnel is a major under-construction immersed tunnel connecting Denmark and Germany. It is expected to reduce rail travel times between Copenhagen and Hamburg from 4.5 hours to under 3 hours, and replace a 45-minute ferry trip with a 7-minute train journey. The project is estimated to cost approximately €7.4 billion, largely funded by government-backed infrastructure spending.
Draw an aggregate demand and aggregate supply (AD/AS) diagram to show the likely long-run impact of this new transport link on the price level and real output in the region.
