dolution

This graph represents aggregate demand and aggregate supply with the economy in long-run equilibrium. (Note: the vertical axis should be the INFLATION RATE instead of the PRICE LEVEL.) PRICE LEVEL LRAS SRAS AD OUTPUT 7.1. Show the effect of the federal government significantly reducing transfer payments such as welfare payments. Decide which curve is affected and place a new curve on the graph to show where this curve would move. Label the new curve AD2, LRAS2, or SRAS2. Do NOT add dashed drop lines Tool tip: Click items in the Tools menu to select curves or other elements you want to place on the graph. Once you’ve selected an item, click on the graph to place it. You can change a label by clicking the label itself and selecting the appropriate title from the drop-down menu that appears. When you are satisfied with your answer, click the Submit Answer button. PRICE LEVEL LRAS SRAS AD OUTPUT Tips Use the pointer to move lines and change labels.