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On an AD/SRAS diagram consider a price level at which the horizontal distance to the aggregate...
Given a downward-sloping aggregate demand (AD) curve and an upward-sloping short-run aggregate supply curve (SRAS), equilibrium...
Given a downward-sloping aggregate demand (AD) curve and an upward-sloping short-run aggregate supply curve (SRAS), equilibrium occurs where the two intersect. The value on the vertical axis is the equilibrium price level and the value on the horizontal axis is the equilibrium value of real GDP or output. What happens to the economy when AD shifts? It is useful to sketch a graph and show the shift. Suppose, for example, interest rates fall or wealth increases due to a stock...
Describe the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve. A. the...
Describe the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve. A. the SRAS curve is horizontal and the LRAS curve is upward sloping B. the SRAS curve is horizontal and the LRAS curve is vertical C. the SRAS curve is vertical and the LRAS curve is horizontal D. the SRAS curve is vertical and the LRAS curve is upward sloping Why is the short-run aggregate supply curve horizontal? A. because output is fixed in the short...
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.
Using the aggregate demand (AD), the short-run aggregate supply (SRAS), and the long-run aggregate supply (LRAS)...
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?
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...
1. Aggregate demand curve of an economy is given by AD = 51 - 0.2P, the...
1. Aggregate demand curve of an economy is given by AD = 51 - 0.2P, the long-run aggregate supply, LRAS, is 30 and the short-run aggregate supply is given by SRAS = 0.3 P (all output measures are in US$ billions and the price level is given as an index number). What could be the unemployment rate if the natural rate of unemployment is 4%? 2. Aggregate demand curve of an economy is given by AD = 51 - 0.2P,...
Price level or GDP deflator SRAS SRAS, SRAS, AD AD AD 0 Output or RGÓP Suppose...
Price level or GDP deflator SRAS SRAS, SRAS, AD AD AD 0 Output or RGÓP Suppose the short-run macroeconomic equilibrium is at point A. In the short run, a positive supply shock would move the equilibrium to A point E. B. point B. C. point H D. point
()-run equilibrium occurs at the intersection of the aggregate demand curve, AD, and the short-run aggregate...
()-run equilibrium occurs at the intersection of the aggregate demand curve, AD, and the short-run aggregate supply curve, SRAS.() ▼ Long Short -run equilibrium occurs at the intersection of AD and the long-run aggregate supply curve, LRAS. Any unanticipated shifts in aggregate demand or supply are called aggregate demand or aggregate supply() ▼ shocks externalities . When aggregate demand decreases while aggregate supply is stable,() ▼ a recessionary an inflationary gap can occur, defined as the difference between how much...
The following graph shows the economy in long-run equilibrium atthe expected price level of 120...
The following graph shows the economy in long-run equilibrium at
the expected price level of 120 and the natural level of output of
$600 billion. Suppose a sudden and severe contraction in the
housing market reduces the value of homes and causes consumers to
spend less.Shift the short-run aggregate supply (AS) curve or the aggregate
demand (AD) curve to show the short-run impact of
the housing market slump.In the short run, the decrease in consumption spending
associated with the housing...
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run...
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run AS curve (that is, completely sticky prices), suppose the economy is at the natural rate of unemployment and so, at long-run equilibrium. Suddenly, taxes are reduced with no change in government spending. Tell me (or show on a graph) what happens to the IS and/or LM curves. Show on a different graph what happens on the AS-AD diagram in the short-run (drawing in 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...
Price level or GDP deflator SRAS SRAS, SRAS, AD AD AD 0 Output or RGÓP Suppose the short-run macroeconomic equilibrium is at point A. In the short run, a positive supply shock would move the equilibrium to A point E. B. point B. C. point H D. point
The following graph shows the economy in long-run equilibrium at
the expected price level of 120 and the natural level of output of
$600 billion. Suppose a sudden and severe contraction in the
housing market reduces the value of homes and causes consumers to
spend less.Shift the short-run aggregate supply (AS) curve or the aggregate
demand (AD) curve to show the short-run impact of
the housing market slump.In the short run, the decrease in consumption spending
associated with the housing...
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run AS curve (that is, completely sticky prices), suppose the economy is at the natural rate of unemployment and so, at long-run equilibrium. Suddenly, taxes are reduced with no change in government spending. Tell me (or show on a graph) what happens to the IS and/or LM curves. Show on a different graph what happens on the AS-AD diagram in the short-run (drawing in the...
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