The economy below is currently at its long run macro equilibrium. Assume AD increases so that the economy produces more than its full employment level of real GDP. Draw this short run change. Label the equilibrium ‘A’. Draw what is expected to happen in the long run. Label the new equilibrium ‘B’. Explain what happens to the price level and output in both the short run and the long run.

Question

The economy below is currently at its long run macro equilibrium. Assume AD increases so that the economy produces more than its full employment level of real GDP.  Draw this short run change. Label the equilibrium ‘A’. Draw what is expected to happen in the long run. Label the new equilibrium  ‘B’. Explain what happens to the price level and output in both the short run and the long run.

anonymous · Answer

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anonymous · Answer

So, for this I pretty much, I hope I have it correct. If not mind someone point out what I did wrong. 

Knowing that the AD graph increases, it shifts to the right, correct?

anonymous · Answer

Correct.

anonymous · Answer

BruLee, would this mean that I graphed it correctly (g2.png)? The new equilibriums are positioned well? I hope I did.

anonymous · Answer

Point A, is in short run.
Point B, is in long run. 

Somehow, I feel uncomfortable with my answer (g2.png).

anonymous · Answer

Yes it is correct, you should be more confident because you know all of the answers. 
Good luck.

anonymous · Answer

I appreciate your help. 
Doesn't hurt to double check with people who know or have experience with this econ. stuff. Thanks. :)