Homework Answers
Option B is correct. In the long run, there is increase in the price level due to rightward shift of the AD curve.
Option A is wrong as Rightward shift of the AS curve will decrease the price level.
Option C is wrong as it affect the aggregate production
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In the long run, the aggregate price level increases. This Select one: a. Is due to...
The following graph shows the short-run aggregate supply curve (AS), the aggregate demand curve (AD), and the long-run aggregate supply curve (LRAS) for a hypothetical economy
9. Economic fluctuations II The following graph shows the short-run aggregate supply curve (AS), the aggregate demand curve (AD), and the long-run aggregate supply curve (LRAS) for a hypothetical economy. Initially, the expected price level is equal to the actual price level, and the economy is in long-run equilibrium at its natural level of output, $120 billion. Suppose a bout of severe weather drives up agricultural costs, increases the costs of transporting goods and services, and increases the costs of producing goods...
Economics chart The following graph shows the economy in long-run equilibrium at the price level of...
Economics chart The following graph shows the economy in long-run equilibrium at the price level of 120 and potential output of $300 billion. Suppose several foreign economies experience severe recessions, causing foreign purchases of domestic goods and services to decline sharply. Shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the economic turmoil abroad. Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if...
In the long run, an increase in AD will result in: A. no change in the aggregate price level. B. increases in...
In the long run, an increase in AD will result in: A. no change in the aggregate price level. B. increases in both the aggregate price level and the aggregate output level. C. increase in the aggregate output level. D. an increase in the aggregate price level but no change in the aggregate output level.
The effects of a higher than expected price level are shown by a. shifting the short-run aggregate supply curve right. b...
The effects of a higher than expected price level are shown by a. shifting the short-run aggregate supply curve right. b. shifting the short-run aggregate supply curve left. c. moving to the right along a given aggregate supply curve. d. moving to the left along a given aggregate supply curve.
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 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 short-run aggregate supply curve shows the short-run relationship between the A. price level and quantity...
The short-run aggregate supply curve shows the short-run relationship between the A. price level and quantity supplied in one market. B. price level and total demand in the entire economy. C. price level and the willingness of firms to supply output to the economy. D. consumption level and the price level. Evidence about the behavior of prices in the economy suggests that changes in aggregate demand have a relatively （Large or small） effect on prices within a few quarters so...
8. Economic fluctuations I The following graph shows the economy in long-run equilibrium at the expected...
8. Economic fluctuations I The following graph shows the economy in long-run equilibrium at the expected price level of 120 and the natural level of output of $300 billion. Suppose the government increases spending on building and repairing highways, bridges, and ports. Shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the increase in government spending. In the short run, the increase in government spending on infrastructure causes the price level to _______...
5) The positive relationship between short-run aggregate supply and the price level indicates that, in the...
5) The positive relationship between short-run aggregate supply and the price level indicates that, in the short run, •A) firms produce more output as the price level falls. •B) firms produce more output as the price level rises. •C) the money wage rate increases when moving along the short-run aggregate supply curve. •D) lower price levels are more profitable for firms.
The Queensland economy is initially in long-run equilibrium. But the economy is hit by a price...
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...
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...
5) The positive relationship between short-run aggregate supply and the price level indicates that, in the short run, •A) firms produce more output as the price level falls. •B) firms produce more output as the price level rises. •C) the money wage rate increases when moving along the short-run aggregate supply curve. •D) lower price levels are more profitable for firms.
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