he following graph shows the short-run aggregate supply curve (AS), the aggregate demand curve (AD), and the long-run aggregate-supply curve LRAS) for a hypothetical economy. Initally, the expected price level is equal to the actual price fevel, and the economy is in long-ruin equibium at is natural level of output, \$110 billion. Suppose a bout of severe weather drives up agricultural costs, increases the costs of transporting goods and services, and increases the costs of producing goods and services in this economy. Use the graph to help you answer the questions about the short-run and fong-run elfects of the increase in production costs bhat follow. (Note: You will not be graded on any adjustments made to the graph.) Hint: For sumplicity, ignore any possible impact of the severe weather on the natural level of output. Homework (Ch 20) The short-run economic outcome resulting from the increase in prpduction costs is known as: Now suppose that the government decides not to take any action in response to the short-run econornic impact of the severe weather. In the long run, when the government does nothing, the output in the econorny will be billion and the price level will be