Using the AD-AS diagram, draw an economy in long run
equilibrium. Indicate output and price level as Y1 and
P1.
Suppose a pandemic is affecting the economy and the Federal
government invests heavily in diagnostic and anti-body testing,
increasing government purchases by 10 billion. Indicate the effect
on the economy using your diagram. Remember, decide which curve
shifts and which direction. Indicate the new equilibrium with Y2
and P2.
In words, what happens to the economy given the increase in...