9. The figure shows the rightward shift of the short run aggregate supply, the rightward shift is an increase in the supply. This can be caused by the positive supply shocks, such as the tax deductions, decrease in input prices, etc.... Here this might be due to the increase in the business confidence , when they see profitability in the future the firms obviously would increase the production.
The increase in taxes and the higher wage adds more to the cost of production of the firms and when the cost of production increases the firms cut back their production and this is a leftward shift of the supply curve.
Ans: Business are increasing optimistic about the future.
11. If the full employment occurs at the point 'a' the , so this might be a demand pull inflation. The demand full inflation occurs due to the excessive demand for the goods and service. This is an increase in the aggregate demand and it shown by the rightward shift of the AD curve.
Ans: Demand pull inflation.
16. The rise in the oil price is a negative supply shock which will decrease the short run aggregate supply, this is a leftward shift of the SRAS curve. When the SRAS shifts to the left the price level increases and the real GDP decreases.
Ans: Leftward shift in SRAS 2 :a.
17. This is a long run equilibrium , the long run equilibrium occurs where the short aggregate supply, aggregate demand and the long run aggregate supply intersects each other or equals. '
Ans: 3000; 100.
Chapter 9 Part 2: Homework Problems Done 9. (Figure: Determining SRAS Shifts 2) Aggregate Output (Q)...
(Figure: Determining SRAS Shifts) If there is a decrease in input prices, the short-run aggregate supply curve will shift from SRAS, to _____ and the price level will shift to SRASZ SRAS. SRAS, P2 Aggregate Price Level (P) РО PL AD 0 Q2 QO Q Aggregate Output (Q) SRAS1: P1 SRAS2: P2
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...
Done Chapter 13: Homework Probiems (Figure: Shits in SRAS and AD) If the economy is at short-run equilibrium point b because of a negative supply shock, the Federal Reserve could enact an expansionan equilibrium to pointAs a resuit of this, the price level wouldand real output would monetary pollcy, thus shifting the new AS AD, Od, decrease; increase c; further increase, increase a; decrease, further decrease No monetary palicy would have any effect, the equilibrium will remain at point b....
Figure: AD–AS Refer to Figure: AD–AS. Assume that the economy is in long-run equilibrium. If the Federal Reserve were to lower the targeted federal funds rate we would most likely expect: there will be a downward movement along the aggregate demand curve AD1. the aggregate demand curve will stay unchanged at AD1. the aggregate demand curve will shift to AD3. the aggregate demand curve will shift to AD2. LRAS Aggregate price level SRAS AD, AD AD, Y₂ YpY, Real GDP
SRAS, SRAS SRAS, Agente Price Level AD Output) (Use figure above) If there is a decrease in input prices, the SRAS curve can shift from SRAS, to and the price level will be at: 10 SRAS1: Po OSRAS1: P1 SRAS2: P1 SRAS 2: PO
Figure: Effects of Contractionary Fiscal Policies LRAS SRAS AD Aggregate Output (Q) ot t Expansionary fiscal policy should be used to ensure a higher price level Contractionary fiscal policies should be used to reduce inflation Contractionary fiscal policy should be used to ensure a higher price level Expansionary fiscal policy should be used to increase aggregate demand Which of the following statements is true regarding the diagram above
(Figure: AD– AS Model II) Refer to Figure: AD– AS Model II. If the value of household wealth increases, the _____ curve will shift to the _____. A. SRAS; right B. SRAS; left C. AD; left D. AD; right Aggregate price level LRAS SRAS1 E1 P1 AD1 Y, = potential output Real GDP
Using the aggregate demand (AD), the short-run aggregate supply (SRAS), and the long-run aggregate supply (LRAS) curves, briefly explain how an open market purchase will affect the equilibrium price level (P) and real output (Y) in the short run. Assume the economy is initially in a recession?
Aggregate Demand and Aggregate Supply - End of Chapter Problems 8. In Wageland, all workers sign annual wage contracts each year on Jan. 1. In late January, a new computer operating system is introduced that increases labor productivity dramatically. In the accompanying diagram, shift the AD and/or SRAS curves and move the equilibrium point to its new position to show how Wageland will move from one short-run macroeconomic equilibrium to another. SRAS Aggregate price level 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...