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2.3.3 Long-run AS

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Question 17

An initial macroeconomic equilibrium diagram with the Average Price Level on the vertical axis and Real National Output (Y) on the horizontal axis. A downward-sloping AD curve intersects a vertical Long-Run Aggregate Supply curve (LRAS1) at an initial price level of PL1 and equilibrium real national output of Y1.

Using the classic long-run aggregate supply (LRAS) and aggregate demand (AD) diagram above, show the effect of a permanent increase in net business investment on the equilibrium level of real national output and the average price level of the economy.

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2.3.3 Long-run AS Questions

  1. A Level
  2. /Economics
  3. /2.3.3 Long-run AS