Question:
AD and SRAS Diagram -AD Shifts to the Right. Explain what has Happened and will happen?
Author: go kysAnswer:
-When AD Increases to AD2, a New Equilibrium will be setup at a higher Real GDP and Price Level -More Output then means more Labour [Derived Demand] leading to less Inflation -But the Higher Prices means that 'Demand-pull Inflation' has Occurred -The Opposite [AD Falling] is True [Unemployment Up, Output down, but Inflation down]
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![-When AD Increases to AD2, a New Equilibrium will be setup at a higher Real GDP and Price Level
-More Output then means more Labour [Derived Demand] leading to less Inflation
-But the Higher Prices means that 'Demand-pull Inflation' has Occurred
-The Opposite [AD Falling] is True [Unemployment Up, Output down, but Inflation down]](https://markdown.memory.com/eq_uploads/1110385/question_image_b02841a0-51a5-4d7f-ac11-0fa381e07fe5.jpg)
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go kys