AP Macroeconomics 3.6: Short-Run AD–AS Changes

Analyze how aggregate demand and short-run aggregate supply shocks change real output, employment, and the price level in the short run.

[Maximum number: 1]

Assume that Nepal is in long-run macroeconomic equilibrium and has an open economy.

Nepal and Thailand are trading partners. Assume that Thailand experiences an increase

in real income. On your graph in part A, show the short-run effect of the increase in real

income in Thailand on real output and the price level in Nepal, labeling the new short-run

equilibrium real output $\mathrm{Y}_{2}$ and the new short-run equilibrium price level $\mathrm{PL}_{2}$ .

B\nPoint 3	On the graph from part A, show the short-run effect of the increase in real income in Thailand as a rightward shift of Nepal\'s aggregate demand curve, resulting in an increase in real output, labeled $\mathrm{Y}_{2}$ , and an increase in the price level, labeled $\mathrm{PL}_{2}$ .\nPrice Level	1 point

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MOD-2.H—Explain (using graphs as appropriate) the response of output, employment, and the price level to an aggregate demand or aggregate… question 1