Some events change aggregate demand from AD0 to AD1 and aggregate supply from AS0 to AS1.
Some events change aggregate demand from AD0 to AD1 and aggregate supply from AS0 to AS1. What is the new macroeconomic equilibrium?
10.Japan economic recovery under way as deflation eases
Consumer prices excluding fresh food declined 0.4 percent from a year earlier—the smallest drop since 2009. The unemployment rate unexpectedly fell to 4.9 percent from 5.1 percent—the first decrease since September. The economy will emerge from its slump “soon.”
Source: Bloomberg, January 27, 2011
On an AS-AD graph show the macroeconomic equilibrium in Japan in 2010. Show why economic recovery is under way and deflation is easing.