Macroeconomic
Using aggregate demand and aggregate supply (AD-SRAS) diagrams, explain what will happen to the equilibrium price level and Real GDP when each of the following events occurs:
(i)A decrease in income taxes; (5 marks)
(ii)An increase in interest rate; (5 marks)
(iii)An adverse supply shock. (5 marks)
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1. Explain what will happen to the price level real GDP and the unemployment rate in...
1. Explain what will happen to the price level real GDP and the unemployment rate in the following cases: a. AD falls by the same amount that SRAS rises b. AD falls by less than SRAS rises c. AD falls by more than SRAS falls d. AD falls by the same amount that SRAS falls e. AD falls by less than SRAS falls 2. Explain how expectations about future sales will affect investment. 3. How will a change in the...
The graphs illustrate an initial equilibrium for the economy. Suppose that oil prices temporarily decrease Use...
The graphs illustrate an initial equilibrium for the economy. Suppose that oil prices temporarily decrease Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Short-run graph Long-run graph...
Figure: The Money Supply and Aggregate Demand Panel (b) Panel (a) SRAS Price level Price level...
Figure: The Money Supply and Aggregate Demand Panel (b) Panel (a) SRAS Price level Price level SRAS P P2 P2 AD P AD AD2 AD YReal GDP (per year) Real GDP Y (per year) Y2 Y Refer to Figure: The Money Supply and Aggregate Demand. If the Federal Reserve intended to encourage investment and interest rates. This is shown in the money supply, and Treasury bills, expand the economy, it would panel buy; increase; lower; (a) buy; decrease; lower; (a)...
Macroeconomic Multiple Choice Questions Answer All 10 Questions* 1) If the Central Bank of Kuwait puts...
Macroeconomic Multiple Choice Questions
Answer All 10 Questions*
1) If the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at full employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is...
Please answer questions through 10 by referring to the following rete demand (AD) and aggregate supply...
Please answer questions through 10 by referring to the following rete demand (AD) and aggregate supply (AS) diagrams. In each case the initiall e A Prise level PA and real output and the subsequent equilibrium at point B (Price level and real output level ya) Price level Panel 1 Panel II AD AS. Price level AD ADA as real GDP YA real GDP Panel III Panel IV Price level Price level AD ADA AD, AS ASS ASA PR YB real...
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...
Suppose the current level of real GDP for an economy is below its potential level of...
Suppose the current level of real GDP for an economy is below its potential level of RGDP. Starting with this situation, and in the absence of any government action, what should next happen in the AD-AS model? Group of answer choices A. A decrease in the Long-Run Aggregate Supply B. An increase in Aggregate Demand C. A decrease in Aggregate Demand D. An increase in the Short-Run Aggregate Supply E. An increase in the Long-Run Aggregate Supply F. A decrease...
6. Which set of changes is definitely predicted to lower Real GDP in the short run?...
6. Which set of changes is definitely predicted to lower Real GDP in the short run? a. The money supply falls and labor productivity rises. b. The U.S. dollar appreciates and wage rates fall. c. The U.S. dollar depreciates and the government passes a law making it easier for entrepreneurs to make a profit. d. Foreign real national income falls and the economy experiences an adverse supply shock. 7. Which set of changes will definitely shift the aggregate demand (AD)...
The graph below depicts the aggregate demand, Irrun aggregate supply, and short-run aggregate supply curves for...
The graph below depicts the aggregate demand, Irrun aggregate supply, and short-run aggregate supply curves for the United States at an initial long-run macroeconomic equilibrium Price level] (P) LRAS SRAS Real GDP Consider a situation in which two things happen simultaneously: there is a deterioration of institutions, and the federal government massively increases spending. Which of the graphs below illustrates the shifts in this model given this situation? Price level Price level (P) (P) URAS LRAS, LRAS SRAS SRAS SRAS...
Which one of the following would cause an increase in the aggregate supply?
QUESTIN 18 Which one of the following would cause an increase in the aggregate supply? a. insecurity about jobs and future income. b. improvements in economic conditions in other countries. C. a decrease in labor supplied d. new discoveries of raw materials QUESTIN 19 Which one of the following statements is correct? I. A drop in the foreign exchange value of the dollar would increase aggregate demand II. A decrease in the amount of money in circulation would increase aggregate demand a. I only b. Il only c. Both I and II d....
The graphs illustrate an initial equilibrium for the economy. Suppose that oil prices temporarily decrease Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Short-run graph Long-run graph...
Figure: The Money Supply and Aggregate Demand Panel (b) Panel (a) SRAS Price level Price level SRAS P P2 P2 AD P AD AD2 AD YReal GDP (per year) Real GDP Y (per year) Y2 Y Refer to Figure: The Money Supply and Aggregate Demand. If the Federal Reserve intended to encourage investment and interest rates. This is shown in the money supply, and Treasury bills, expand the economy, it would panel buy; increase; lower; (a) buy; decrease; lower; (a)...
Macroeconomic Multiple Choice Questions
Answer All 10 Questions*
1) If the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at full employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is...
Please answer questions through 10 by referring to the following rete demand (AD) and aggregate supply (AS) diagrams. In each case the initiall e A Prise level PA and real output and the subsequent equilibrium at point B (Price level and real output level ya) Price level Panel 1 Panel II AD AS. Price level AD ADA as real GDP YA real GDP Panel III Panel IV Price level Price level AD ADA AD, AS ASS ASA PR YB real...
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...
6. Which set of changes is definitely predicted to lower Real GDP in the short run? a. The money supply falls and labor productivity rises. b. The U.S. dollar appreciates and wage rates fall. c. The U.S. dollar depreciates and the government passes a law making it easier for entrepreneurs to make a profit. d. Foreign real national income falls and the economy experiences an adverse supply shock. 7. Which set of changes will definitely shift the aggregate demand (AD)...
The graph below depicts the aggregate demand, Irrun aggregate supply, and short-run aggregate supply curves for the United States at an initial long-run macroeconomic equilibrium Price level] (P) LRAS SRAS Real GDP Consider a situation in which two things happen simultaneously: there is a deterioration of institutions, and the federal government massively increases spending. Which of the graphs below illustrates the shifts in this model given this situation? Price level Price level (P) (P) URAS LRAS, LRAS SRAS SRAS SRAS...
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