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(Solved): Use the graph to answer the question that follows. A graph has Real GDP along the horizontal axis a ...



Use the graph to answer the question that follows. A graph has Real GDP along the horizontal axis and Price Level along the vertical axis. A vertical line is labeled LRAS and Q0 at the axis. An upward sloping curve labeled SRAS1 intersects a downward sloping curve labeled AD year 1 at a vertical value of 100. A second upward sloping curve labeled SRAS2 intersects downward sloping curve AD year 2 at vertical value of 110. Based on the accompanying graph, assuming that the velocity of money is constant, between year 1 and year 2, which of the following statements must be true? The money supply decreased between years 1 and 2. Potential real GDP increased by 110 percent The money supply increased by 10 percent from year 1 to year 2 Neither nominal GDP nor real GDP changed between years 1 and 2 This economy has more cyclical unemployment in year 1 than in year 2



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