Homework Answers
If there is no intervention by the policymakers then aggregate demand rises,because of lower price level.AD shifts to the right increasing both price level and output.
Answer-Increase,increase
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In the economy depicted in the graph, what happens if there is no intervention from policy...
The graphs illustrate an initial equilibrium for the economy. Suppose that oil prices temporarily decrease Use...
The graphs illustrate an initial equilibrium for the economy. Suppose that oil prices temporarily decrease Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Short-run graph Long-run graph...
If the aggregate demand in the economy depicted below is AD2, ceteris paribus, what is likely...
If the aggregate demand in the economy depicted below is AD2, ceteris paribus, what is likely to happen in this economy in the long run (without any government intervention)? Price level LRAS SRAS P3 AD3 AD1 2 AD2 2 Y Y Real GDP O The SRAS curve will shift to the right. Nominal wages will decrease. Nominal wages will increase. Both the nominal wages will decrease and the SRAS curve will shift to the right. O The SRAS curve will...
The accompanying graph illstrates an economy in long-run equilibrium which is denoted by point FiR Suppose...
The accompanying graph illstrates an economy in long-run equilibrium which is denoted by point FiR Suppose a new technology is discovered which increases productivity. In the graph, demonstrate how the economy moves to its new long-run equilibrium by shifting the appropriate curves and placing point ELR at the new long- run equilibrium. LRAS SRAS LR In the long run, the aggregate price level decreases and real GDP (aggregate output) AD increases. Real GDP
Using aggregate demand (AD), short-run aggregate supply (SRAS) and long-run aggregate supply (LRAS) curves
Question 1: AD-SRAS-LRAS Model Using aggregate demand (AD), short-run aggregate supply (SRAS) and long-run aggregate supply (LRAS) curves, graphically illustrate the effect of an increase in the money supply on output and prices in the short and long run. Assume that the economy is initially in long run equilibrium at the potential output level and prices are fixed in the short-run. In your graph, label "A" for the initial equilibrium, "B' for the short-run equilibrium, and "C" for the long-run equilibrium.
The following figure depicts the aggregate demand (AD), theshort-run aggregate supply (SRAS), and the long-run...
The following figure depicts the aggregate demand (AD), the
short-run aggregate supply (SRAS), and the long-run aggregate
supply (LRAS) curves for an economy. The economy is initially at
long-run equilibrium, at point A. Suppose that there is an increase
in the amount of investment in the economy due to a reduction in
the real interest rate. This increase in investment shifts the AD
curve to the right, depicted below in the movement of the economy
from point A to point...
7. Effects of an active or passive policy
7. Effects of an active or passive policy The following graph shows the aggregate demand curve (AD), the short-run aggregate supply curve SRAS), and the long-run aggregate supply curve (LRAS) for a hypothetical economy. Suppose the economy is in short-run equilibrium. The _______ of $4 trillion drives unemployment _______ the unemployment rate consistent with full-employment output. Suppose public officials are concerned about the $4 trillion gap in the economy and the resulting lower-than-expected aggregate demand. The government has decided to follow an active...
6. The long-run effects of monetary policy Aa Aa The following graphs show an economy that is cur...
6. The long-run effects of monetary policy The following graphs show an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second shows the long-run (LR) and short-run (SR) Phillips curves. The point on each graph shows the economy's current position. According to the graphs, potential output in this economy is _______ and the natural rate of unemployment is _______ .Suppose the central bank of the economy decreases the...
If fiscal policy is used to keep unemployment below the natural rate of unemployment, what will...
If fiscal policy is used to keep unemployment below the natural rate of unemployment, what will happen to prices and output? Prices will increase. decrease. Output will increase. decrease. Use the graph to demonstrate your answers by shifting the appropriate curve or curves. SRAS AND AD.
The graph depicts a dynamic aggregate demand (AD) and aggregate supply (AS) model of the economy....
The graph depicts a dynamic aggregate demand (AD) and aggregate supply (AS) model of the economy. Suppose that in 2003, the economy is in macroeconomic equilibrium, with GDP at GDP (year 1). The Fed projects that in 2004, the aggregate demand curve will be AD (year 2), that potential real GDP will be $12.45 trillion (GDP (year 2), and that actual real GDP will be $12.39 trillion LRAS (year 1) LRAS (year 2) SRAS (ycar1) SRAS (year 2 ear Year...
The graphs illustrate an initial equilibrium for the economy. Suppose that the stock market broadly decreases....
The graphs illustrate an initial equilibrium for the economy. Suppose that the stock market broadly decreases. Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Short-run graph Long-run...
The graphs illustrate an initial equilibrium for the economy. Suppose that oil prices temporarily decrease Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Short-run graph Long-run graph...
If the aggregate demand in the economy depicted below is AD2, ceteris paribus, what is likely to happen in this economy in the long run (without any government intervention)? Price level LRAS SRAS P3 AD3 AD1 2 AD2 2 Y Y Real GDP O The SRAS curve will shift to the right. Nominal wages will decrease. Nominal wages will increase. Both the nominal wages will decrease and the SRAS curve will shift to the right. O The SRAS curve will...
The accompanying graph illstrates an economy in long-run equilibrium which is denoted by point FiR Suppose a new technology is discovered which increases productivity. In the graph, demonstrate how the economy moves to its new long-run equilibrium by shifting the appropriate curves and placing point ELR at the new long- run equilibrium. LRAS SRAS LR In the long run, the aggregate price level decreases and real GDP (aggregate output) AD increases. Real GDP
The following figure depicts the aggregate demand (AD), the
short-run aggregate supply (SRAS), and the long-run aggregate
supply (LRAS) curves for an economy. The economy is initially at
long-run equilibrium, at point A. Suppose that there is an increase
in the amount of investment in the economy due to a reduction in
the real interest rate. This increase in investment shifts the AD
curve to the right, depicted below in the movement of the economy
from point A to point...
The graph depicts a dynamic aggregate demand (AD) and aggregate supply (AS) model of the economy. Suppose that in 2003, the economy is in macroeconomic equilibrium, with GDP at GDP (year 1). The Fed projects that in 2004, the aggregate demand curve will be AD (year 2), that potential real GDP will be $12.45 trillion (GDP (year 2), and that actual real GDP will be $12.39 trillion LRAS (year 1) LRAS (year 2) SRAS (ycar1) SRAS (year 2 ear Year...
The graphs illustrate an initial equilibrium for the economy. Suppose that the stock market broadly decreases. Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Short-run graph Long-run...
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