A. Sketch the Aggregate Demand, Short-Run Aggregate Supply, and Long-Run Aggregate Supply of an economy in long-run equilibrium.
B. Suppose economists the dollar appreciates against all other currency. Explain how that impacts imports into the United States and exports from the United States.
C. How does the dollar appreciating impact AD, SAS, and LRAS? Show the short-run impact on the graph in A. How does real GDP change in the short-run? How about the price level?
D. In the absence of any actual increase in technology, capital, or labor, how will the real GDP change in the long run according to the classical view of the AS-AD model? What happens to the price level in the long-run? Explain, showing the long-run e ects on the graph in A.