Find the current short-run equilibrium values of p and y

Reference no: EM13218606

Assume that the long-run aggregate supply curve is vertical at Y = 5,000 while the short-run aggregate supply curve is horizontal at P = $1. The aggregate demand curve is Y = 2(M/P) and M = $7,500.

a) Find the current short-run equilibrium values of P and Y.

b) Find the expected long-run equilibrium values of P and Y.

c) If M decreases to $4,000, simulated the expected short and long run effects on prices, output, and unemployment.

Reference no: EM13218606

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