Use the SRAS curve and this new AD curve to find the new equilibrium aggregate price level and the new equilibrium real GDP. Thus, 48,335 - 5000P = 5000P 10,000 – 10,000P = 58,335 P = 5.83 Y = 48,335 5000(5.8335) = 48,335 29,167.50 = 19,167,50 – – Or, Y = 5000P 10,000 = 5000(5.8335) 10,000 = 29,167.50– 10,000 = 19,167.50 – – It is not possible for this economy to reach Yfe solely through monetary policy. This model suggests that it is possible to have an economic scenario where the economy cannot return to Yfe in the short run through government intervention that is solely in the form of monetary policy.
Use the SRAS curve and this new AD curve to find the new equilibrium aggregate price level and the new equilibrium real GDP. Thus, 48,335 - 5000P = 5000P – 10,000 10,000P = 58,335 P = 5.83 Y = 48,335 – 5000(5.8335) = 48,335 – 29,167.50 = 19,167,50 Or, Y = 5000P – 10,000 = 5000(5.8335) – 10,000 = 29,167.50– 10,000 = 19,167.50 It is not possible for this economy to reach Yfe solely through monetary policy. This model suggests that it is possible to have an economic scenario where the economy cannot return to Yfe in the short run through government intervention that is solely in the form of monetary policy.