Homework Answers
a. Currently economy is in inflationary gap as potential GDP of $8 trillions is less than current equilibrium at $ 9 trillion.
b.If the price level is 110 then aggregate demand will be more than aggregate supply. As aggregate demand is more average price levels will start going up and with increasing average price levels, aggregate supply will be more and economy will come back to equilibrium.
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5- Based on the data in the following table and the fact that potential GDP is...
The table shows Aggregate Demand and Short-run Aggregate Supply for a country in which Potential GDP...
The table shows Aggregate Demand and Short-run Aggregate Supply for a country in which Potential GDP is $1,050 billion Price Level Real GDP Demanded Real GDP Supplied 100 $1,150 $1,050 110 $1,100 $1,100 120 $1,050 $1,150 130 $1,000 $1,200 140 $950 $1,250 150 $900 $1,300 160 $850 $1,350 Graph the Aggregate Demand and Short-run Aggregate Supply curves Does this country have an inflationary gap or a recessionary gap? What is the magnitude of the gap as a % of Potential...
The graph shows an economy's potential GDP and the aggregate supply curve. Price level (GDP price...
The graph shows an economy's potential GDP and the aggregate supply curve. Price level (GDP price index, 2009-100) 150 Draw an arrow that shows a rise in the price level when the money wage rate remains unchanged. Label it 1. Potential GDP 140 Draw an arrow that shows a rise in the price level accompanied by the same percentage rise in the money130- wage rate and the money prices of other resources. Label it 2. AS 120 110 90 14.0...
130 120 Price level (GDP deflator, 2000 = 100) 110 B. 100 AD 90 AD2 ADO...
130 120 Price level (GDP deflator, 2000 = 100) 110 B. 100 AD 90 AD2 ADO 0 9.6 9.8 10.0 10.2 10.4 10.6 Real GDP (trillions of 2000 dollars) In the above figure, for a shift from AD1 to AD2, the aggregate demand decreases by 1) 110. 2) 10.4. 3) 0.8. 4) 0.4.
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illust...
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illustrate the short-run effects of the monetary policy by using aggregate demand-aggregate supply model. Be sure to indicate the direction of change in real GDP, the price level and the unemployment rate. b) Illustrate the long-run effects of the monetary policy by using aggregate demand-aggregate supply model....
10.3 Extra Problem 1 Question Help Price level (GDP deflator, 2009=100) The Bureau of Economic Analysis...
10.3 Extra Problem 1 Question Help Price level (GDP deflator, 2009=100) The Bureau of Economic Analysis reported that real GDP during the second quarter of 2007 was $11.5 trillion and the GDP deflator was 120. The Congressional Budget Office estimated potential GDP to be $11.6 trillion in 2007 For the year 2007, draw: 1) the long-run aggregate supply curve 2) the aggregate demand curve 3) the short-run aggregate supply curve. Make the curves consistent with the numbers above and label...
LAS SAS2 130 SAS 120 SASO Price level (GDP deflator, 2000 = 100) 110 А B...
LAS SAS2 130 SAS 120 SASO Price level (GDP deflator, 2000 = 100) 110 А B 100 F AD2 AD ADO O 6 8 10 12 14 16 Real GDP (trillions of 2000 dollars) If instead the government decides not to interfere with the economy and let the economy recover by itself, then__---, causing__---- 1) workers renegotiate their wages; ADO to shift to AD1. 2) workers renegotiate their wages; SASO to shift to SAS1. 3) workers renegotiate their wages; SAS1...
Please make sure to answer which way the lines on the graft shift. Also, all parts of the second photo. M x v-F7x Q. where M is the money supply, V is the velocty of money, P is the economy's...
Please make sure to answer which way the lines on the graft
shift. Also, all parts of the second photo.
M x v-F7x Q. where M is the money supply, V is the velocty of money, P is the economy's price level, and Q is Real GDP ng diagram shows the current aggregate demand (AD) and aggregate supply (AS) curves in a hypothetical economy. 12 AD 10 AS 12 15 18 REAL GDP (Trillions of dollars) What is the GDP...
LAS SAS2 || 130 SAS C 120 SASO Price level (GDP deflator, 2000 = 100) 110...
LAS SAS2 || 130 SAS C 120 SASO Price level (GDP deflator, 2000 = 100) 110 A 100 AD2 90 AD1 0 6 ADO 8 10 12 16 Real GDP (trillions of 2000 dollars) 14 After the surprise above, the government would try to stimulate the economy by 1) shifting ADO to AD1. 2) shifting SASO to SAS1. 3) shifting ADO to AD1 and SASO to SAS1. 4) shifting ADO leftward
Aggregate supply and demand problems For each scenario analyze the impacy of the “shocks” on the nation’s employment rate, real GDP, GDP gap anf price level. In addition illustrate the impact of...
Aggregate supply and demand problems
For
each scenario analyze the impacy of the “shocks” on the nation’s
employment rate, real GDP, GDP gap anf price level. In addition
illustrate the impact of each shock using an aggregate supply and
demand diagram. Finally, analyze the policy options available to
the government to offset the harmful impact of each of these
shocks.
UL uld wnen & bank becomes insolvent? Explain res B. Aggregate Supply and Demand Problem ur knowledge of aggregate supply...
Suppose that workers and firms perfectly forecast inflation, so that the real wage remains unchanged as...
Suppose that workers and firms perfectly forecast inflation, so that the real wage remains unchanged as the price level rises over time. Prices and wages rise at the same rate, which implies that the real wage stays constant. The following graph shows the aggregate demand curve (AD) in an economy in long-run equilibrium. Assume the natural rate of unemployment is 6%, and potential output is $50 trillion. Use the orange points (square symbol) to draw the aggregate supply curve in...
The graph shows an economy's potential GDP and the aggregate supply curve. Price level (GDP price index, 2009-100) 150 Draw an arrow that shows a rise in the price level when the money wage rate remains unchanged. Label it 1. Potential GDP 140 Draw an arrow that shows a rise in the price level accompanied by the same percentage rise in the money130- wage rate and the money prices of other resources. Label it 2. AS 120 110 90 14.0...
130 120 Price level (GDP deflator, 2000 = 100) 110 B. 100 AD 90 AD2 ADO 0 9.6 9.8 10.0 10.2 10.4 10.6 Real GDP (trillions of 2000 dollars) In the above figure, for a shift from AD1 to AD2, the aggregate demand decreases by 1) 110. 2) 10.4. 3) 0.8. 4) 0.4.
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illustrate the short-run effects of the monetary policy by using aggregate demand-aggregate supply model. Be sure to indicate the direction of change in real GDP, the price level and the unemployment rate. b) Illustrate the long-run effects of the monetary policy by using aggregate demand-aggregate supply model....
10.3 Extra Problem 1 Question Help Price level (GDP deflator, 2009=100) The Bureau of Economic Analysis reported that real GDP during the second quarter of 2007 was $11.5 trillion and the GDP deflator was 120. The Congressional Budget Office estimated potential GDP to be $11.6 trillion in 2007 For the year 2007, draw: 1) the long-run aggregate supply curve 2) the aggregate demand curve 3) the short-run aggregate supply curve. Make the curves consistent with the numbers above and label...
LAS SAS2 130 SAS 120 SASO Price level (GDP deflator, 2000 = 100) 110 А B 100 F AD2 AD ADO O 6 8 10 12 14 16 Real GDP (trillions of 2000 dollars) If instead the government decides not to interfere with the economy and let the economy recover by itself, then__---, causing__---- 1) workers renegotiate their wages; ADO to shift to AD1. 2) workers renegotiate their wages; SASO to shift to SAS1. 3) workers renegotiate their wages; SAS1...
Please make sure to answer which way the lines on the graft
shift. Also, all parts of the second photo.
M x v-F7x Q. where M is the money supply, V is the velocty of money, P is the economy's price level, and Q is Real GDP ng diagram shows the current aggregate demand (AD) and aggregate supply (AS) curves in a hypothetical economy. 12 AD 10 AS 12 15 18 REAL GDP (Trillions of dollars) What is the GDP...
LAS SAS2 || 130 SAS C 120 SASO Price level (GDP deflator, 2000 = 100) 110 A 100 AD2 90 AD1 0 6 ADO 8 10 12 16 Real GDP (trillions of 2000 dollars) 14 After the surprise above, the government would try to stimulate the economy by 1) shifting ADO to AD1. 2) shifting SASO to SAS1. 3) shifting ADO to AD1 and SASO to SAS1. 4) shifting ADO leftward
Aggregate supply and demand problems
For
each scenario analyze the impacy of the “shocks” on the nation’s
employment rate, real GDP, GDP gap anf price level. In addition
illustrate the impact of each shock using an aggregate supply and
demand diagram. Finally, analyze the policy options available to
the government to offset the harmful impact of each of these
shocks.
UL uld wnen & bank becomes insolvent? Explain res B. Aggregate Supply and Demand Problem ur knowledge of aggregate supply...
Suppose that workers and firms perfectly forecast inflation, so that the real wage remains unchanged as the price level rises over time. Prices and wages rise at the same rate, which implies that the real wage stays constant. The following graph shows the aggregate demand curve (AD) in an economy in long-run equilibrium. Assume the natural rate of unemployment is 6%, and potential output is $50 trillion. Use the orange points (square symbol) to draw the aggregate supply curve in...
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