Don't need answer to 1 and 2. NEED solution for rest of questions please.
At point 2, the actual output is higher than the potential output. Therefore, the unemployment is lower than the natural rate of employment.
Thus, the labour market is tight
(Tight means very low unemployment- demand high but supply of labour low)
Due to this, there would be an upward pressure on wages. As a result, firms will be forced to increase their prices
Higher wage costs would force producers to reduce production, therefore supply curve would shift inwards (to the left)
Therefore, the output gap narrows as actual output decreases to come in line with the potential output.
The new long run equilibrium would have higher inflation as the wages have increased, demand has increased.
Don't need answer to 1 and 2. NEED solution for rest of questions please. Suppose the...
LRAS In the graph to the right illustrating the AD-AS model, assume the economy was in equilibrium at point E1. Then, assume there was a decline in spending on new houses. Where does short-run equilibrium occur? Where does long-run equilibrium occur? 1.) Using the point drawing tool, plot the point that represents short-run equilibrium. Label this point E2. Price level, P. SRAS a SRAS2E1 2.) Using the point drawing tool, plot the point that represents long-run equilibrium. Label this point...
от тот отрост Quiz OTPPUUIN The figure to the right shows the result of an increase in aggregate demand from AD, to AD, . In its new short run equilibrium the economy is resting vits potential output. AS(Long run) AS. (Short run) Because the economy is producing beyond its potential output level, input prices and hence production costs are being pushed upward. Using either the line drawing tool or the 3-point curved line drawing tool, illustrate the impact of rising...
2. Phillips Curve. An economy has the following functions for its short run aggregate supply (SRAS), Okun's Law (OL), and Phillips Curve (PC): SRAS: P = EP + (1/2)(y - 3) OL: (Y-Y) = -4(u-u") PC:T = ET - (1/5)( - 6) The economy begins at its natural rate of output with a stable price level equal to $5. a.) Output is at its natural level when the price level is equal to expectations. Calculate the natural rate of output...
supply curve to shift leftward to SRAS, as shown in the graph at right. The economy is currently in short-run equilibrium at point E, and the reduction in supply is expected to be permanent. LRAS SRAS SRAS 1.) Using the line drawing and/or 3-point curved line drawing tool, show the adjustment to long-run equilibrium in this situation. Properly label your new curve(s). 2.) Using the point drawing tool, identify the new long-run equilibrium point and label the point 'E2 Carefully...
HELP!! Need to know how to do the graphs for these. And can you please explain it to me so I can learn it? Part 2: Short Answer Questions (30 points) Problem 3: Short run and long run economic analysis (20 points) Suppue thar he gonemanses hosabs incentive to consume. Consider the impact of this event on the short run economy and long run economy using the AD/AS model. Draw here the following the AD/AS diagram. Assume, for the sake...
Describe three types of short-run macroeconomic equilibrium. A macroeconomic equilibrium in which real GDP is less than potential GDP is _______ equilibrium. And one in which real GDP equals potential GDP is _______ equlibrium. A. a below full-employment, a full-employment B. a full-employment, a below full-employment C. a full-employment, an inflationary D. a below full-employment, a recessionary The graph shows an economy's long-run aggregate supply curve. The economy is at an above full-employment equilibrium. Draw an aggregate demand curve and a short-run aggregate supply curve. Label them. In the graph,...
Keynesian Analyses Graph: You may use your preferred drawing tool such as Paint, Word, PowerPoint or you can use pencil and paper for this assignment. You are to illustrate/graph long run aggregate supply curve, short run aggregate supply curve and aggregate demand curve in equilibrium. The equilibrium price level is $110 and equilibrium output level is 12 trillion. Show a shift of the curve that leads to an inflationary gap. Label the new curve and label the inflationary gap. Capture...
The Queensland economy is initially in long-run equilibrium. But the economy is hit by a price increase in imported fertilizers which are essential for the state's agricultural sector. In the short run, the short-run aggregate supply curve shifts left. In the long run, the price level is lower than its original value, output returns to potential, and real wages increase. In the short run, the short-run aggregate supply curve shifts right. In the long run, the price level returns to...
Chapter 9 Part 2: Homework Problems Done 9. (Figure: Determining SRAS Shifts 2) Aggregate Output (Q) Which of the following might cause a change in short-run aggregate supply? Unions successfully negotiate higher wages. Consumer incomes decrease. Businesses are increasingly optimistic about the future. Taxes on businesses increase. Start: 4:2S PM Aggregate Price Level (P) Done Chapter 9 Part 2: Homework Problems 11. (Figure: Shifting SRAS and AD) 200 180 SRAS 160 140 120 AD2 100 80 a 6아- AD 40아-...
9. Applying the extended AD-AS model Financial crises, such as the one that impacted many developed countries starting in 2007, decrease banks’ ability and willingness to make loans. Decreased availability of credit decreases businesses’ ability to make investment purchases and consumers’ ability to buy goods and services. As a result, a financial crisis is a negative shock for an economy. The following graph shows an economy’s aggregate demand curve and its short-run and long-run aggregate supply curves after a financial...