Graphical representation of full employment, above full employment and below full employment.
Utilizing an aggregate demand (AD) and aggregate supply (AS) model in which the short-run aggregate supply curve slopes upwards to elucidate the equilibrium level of real GDP and prices if the economy is operating:
a) Draw Graph for Following
(i) at full employment,
(ii) above full employment, and
(iii) below full employment.
b) In each case explain the relationship between real GDP and potential GDP.