Determinants of short-run aggregate supply
Determinants of short-run aggregate supply
The following graph shows a decrease in short-run aggregate supply (AS) in a hypothetical economy where the currency is the dollar. Specifically, the short-run aggregate supply curve shifts to the left from to , causing the quantity of output supplied at a price level of 100 to fall from $200 billion to $150 billion.
The following table lists several determinants of short-run aggregate supply.
Fill in the table by indicating the changes in the determinants necessary to decrease short-run aggregate supply.
| Change Needed to Decrease AS | |
|---|---|
| Inflation expectations | |
| Tax rates | |
| Burdensome regulations |
Homework Answers
| Inflation expectations | |
| Human capital | |
| Burdensome regulations |
Inflation expectations: Higher
Human capital: Declines
Technology: Declines
Inflation expectations: higher
Tax rates: increase
Burdensome regulations: increase
| Inflation expectations | |
| Tax rates | |
| Technology |
Determinants of aggregate supply
The following graph shows an increase in short-run aggregate supply (AS) in a hypothetical economy where the currency is the dollar. Specifically, the short-run aggregate supply curve shifts to the right from AS to ASs, causing the quantity of output supplied at a price level of 100 to rise from $200 billion to $250 billion.
The following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left from AD1 to AD2, causing the quantity of output demanded to fall at all price levels
4. Determinants of aggregate demand The following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left from AD1 to AD2, causing the quantity of output demanded to fall at all price levels For example, at a price level of 140, output is now $200 billion, where previously it was $300 billion. The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to decrease...
5. Why the aggregate supply curve slopes upward in the short run In the short run,...
5. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer...
6. Why the aggregate supply curve slopes upward in the short run In the short run,...
6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices...
The table shows Aggregate Demand and Short-run Aggregate Supply for a country in which Potential GDP...
The table shows Aggregate Demand and Short-run Aggregate Supply for a country in which Potential GDP is $1,050 billion Price Level Real GDP Demanded Real GDP Supplied 100 $1,150 $1,050 110 $1,100 $1,100 120 $1,050 $1,150 130 $1,000 $1,200 140 $950 $1,250 150 $900 $1,300 160 $850 $1,350 Graph the Aggregate Demand and Short-run Aggregate Supply curves Does this country have an inflationary gap or a recessionary gap? What is the magnitude of the gap as a % of Potential...
6. Why the aggregate supply curve slopes upward in the short run In the short run,...
6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer who expects a...
Why the aggregate supply curve slopes upward in the short run
Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products...
The following graph shows an increase in aggregate demand (AD) in a hypothetical country
The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1 to AD2, causing the quantity of output demanded to rise at all price levels. For example, at a price level of 140, output is now $400 billion, where previously it was $300 billion. The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to increase aggregate demand.
AS2 AS1 ASo Aggregate output Figure 8: 41. Refer to Figure: 8. The aggregate supply curve...
AS2 AS1 ASo Aggregate output Figure 8: 41. Refer to Figure: 8. The aggregate supply curve shifting from AS1 to AS2 will cause 41.- A. hyperinflation. B. cost-push inflation. C. demand-pull inflation. D. deflation. 42. If a country has a trade deficit of $50 billion, which of the following can be true? A. The country's exports are $110 billion, and its imports are S160 billion. B. The country's exports are $150 billion, and its imports are $60 billion. C. The...
1. . (Figure: Determining SRAS Shifts) If there are advances in technology, the short-run aggregate supply...
1.
.
(Figure: Determining SRAS Shifts) If there are advances in
technology, the short-run aggregate supply curve will shift from
SRAS0 to _____ and the price level will shift to
_____.
SRAS1; P0
SRAS2; P2
SRAS2; P1
SRAS1; P1
2.
Simultaneous recession and deflation can be explained by:
a decrease in aggregate supply.
an increase in aggregate supply.
a decrease in aggregate demand.
an increase in aggregate demand.
3.
Which is a determinant of aggregate supply?
household expectations
prices of...
5. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer...
6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices...
AS2 AS1 ASo Aggregate output Figure 8: 41. Refer to Figure: 8. The aggregate supply curve shifting from AS1 to AS2 will cause 41.- A. hyperinflation. B. cost-push inflation. C. demand-pull inflation. D. deflation. 42. If a country has a trade deficit of $50 billion, which of the following can be true? A. The country's exports are $110 billion, and its imports are S160 billion. B. The country's exports are $150 billion, and its imports are $60 billion. C. The...
1.
.
(Figure: Determining SRAS Shifts) If there are advances in
technology, the short-run aggregate supply curve will shift from
SRAS0 to _____ and the price level will shift to
_____.
SRAS1; P0
SRAS2; P2
SRAS2; P1
SRAS1; P1
2.
Simultaneous recession and deflation can be explained by:
a decrease in aggregate supply.
an increase in aggregate supply.
a decrease in aggregate demand.
an increase in aggregate demand.
3.
Which is a determinant of aggregate supply?
household expectations
prices of...
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