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Question 1

The graph below shows the AD-AS diagram for Brazil.

Suppose that the economy is initially in long-run equilibrium with the price level of 700 (Red AD and SRAS curves).

Now suppose that households decide to save a larger share of their income.

As a result of this event, what is the new short-run price level?

 

Hint


Question 2

As a result of this event, what is the new short-run GDP?

 

Hint


Question 3

As a result of this event, what is the new long-run price level?

 

Hint


Question 4

As a result of this event, what is the new long-run GDP?

 

Hint