Answer :
Provide three AS/AD graphs: 1) Full employment equilibrium; 2) Equilibrium with higher unemployment than natural rate; 3) Equilibrium with lower unemployment than natural rate, depicting varying levels of economic output and unemployment.
Unfortunately, I can't directly create graphs, but I can certainly describe the scenarios you're asking for.
Macroeconomic Equilibrium with Full Employment:
In this scenario, the Aggregate Supply (AS) curve intersects the Aggregate Demand (AD) curve at a point where the economy is operating at its potential output level. Unemployment is at its natural rate, and the economy is producing efficiently.
Macroeconomic Equilibrium with Higher Unemployment:
In this scenario, the AD curve intersects the AS curve at a point below the potential output level. Unemployment is higher than the natural rate, indicating a recessionary gap. This suggests that there's not enough demand in the economy to utilize all available resources.
Macroeconomic Equilibrium with Lower Unemployment:
In this scenario, the AD curve intersects the AS curve at a point above the potential output level. Unemployment is lower than the natural rate, indicating an inflationary gap. The economy is operating beyond its capacity, causing upward pressure on prices due to excess demand.
These scenarios showcase the different equilibria that can occur in an economy based on the interaction of aggregate supply and demand. Each scenario has implications for unemployment and inflation levels, highlighting the macroeconomic challenges policymakers face in maintaining stable economic conditions.
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