-The Figure Above Shows the Initial Aggregate Demand Curve, AD₀

question 82

Essay

-The figure above shows the initial aggregate demand curve, AD₀, the initial short-run aggregate supply curve, SAS₀, and the long-run aggregate supply curve, LAS. The points in the figure show possible combinations of real GDP and the price level at which the economy of Atlantia is in macroeconomic equilibrium. The economy is initially at point A. Atlantia's Central Bank then increases the quantity of money year after year. Draw the necessary curves in the figure to show the effects of this on Atlantia's real GDP and price level.
a) What happens to Atlantia's potential GDP?
b) In the short run, what happens to aggregate supply and aggregate demand?
c) What are the new short-run equilibrium real GDP and price level?
d) In the long run, what happens to aggregate supply and aggregate demand?
e) In the long run, what process is unfolding?

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Definitions:

Orienting

The process of familiarizing new employees with their roles, the organizational culture, and the policies and procedures of the company.

New Employee

An individual who has recently joined an organization or company, beginning a period of adjustment and learning in their new role.

Succession Management

This is a strategic process of identifying and developing internal talent with the potential to fill key leadership positions in an organization to ensure continuity and long-term performance.

Transition Risk

The risk associated with changes within a business that can lead to uncertain outcomes and impact business performance.