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4. Again refer to Figure 1, starting from point ", and assume the initial long-run equilibrium...
The following graphs show the state of an economy that is currently in long-run equilibrium.
3. The long-run effects of monetary policy The following graphs show the state of an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second shows the long-run and short-run Phillips curves (LRPC and SRPC).Which of the following statements are true based on these graphs? Check all that apply The natural level of output is $3 trillion. The unemployment rate is currently 6% higher than the natural rate of unemployment. The...
Figure: AD–AS Refer to Figure: AD–AS. Assume that the economy is in long-run equilibrium. If the...
Figure:
AD–AS
Refer to Figure: AD–AS. Assume that the economy
is in long-run equilibrium. If the Federal Reserve were to lower
the targeted federal funds rate we would most likely expect:
there will be a downward movement along the aggregate demand
curve AD1.
the aggregate demand curve will stay unchanged at
AD1.
the aggregate demand curve will shift to
AD3.
the aggregate demand curve will shift to
AD2.
LRAS Aggregate price level SRAS AD, AD AD, Y₂ YpY, Real GDP
QUESTION 31 Figure 13-5 shows the short-run macroeconomic equilibrium of an economy at Point A. In...
QUESTION 31 Figure 13-5 shows the short-run macroeconomic equilibrium of an economy at Point A. In the figure, Point A suggests that: Figure 13-5 LRAS SRAS AD Real GDP a. the government should increase the level of taxes in the cconomy. b. the economy is operating with a recessionary gap c. the govemment should decrcase its budget d. the economy is operating at long-run equilibrium. e. the real value of currency in the economy is lower than its nominal valuc....
The figure to the right shows an economy in an initial long-run equilibrium at point A...
The figure to the right shows an economy in an initial long-run equilibrium at point A a Using the line drawing tool show how, if at all the equilibrium real GDP and the long run equilibrium price level are affected by a decrease in the value of the home currency in terms of the currencies of other nations Properly label this line Carefully follow the instructions above and only draw the required objects b. According to your graph, the equilibrium...
Suppose the central bank, instead of following the rule r = r(Y,π), has a target level...
Suppose the central bank, instead of following the rule r =
r(Y,π), has a target level of inflation. Specifically, it sets r
according to r = rLR + b[π − π*]. Here rLR is the real interest
rate when the economy is in long-run equilibrium; that is, it is
the real interest rate that causes the loan market to be in
equilibrium when Y = �Y. In addition, π* is the central bank’s
target level of inflation, and b is...
The figure to the right shows an economy in an initial long-run equilibrium at point LRAS,...
The figure to the right shows an economy in an initial long-run equilibrium at point LRAS, aUsing the line drawing fool, show how, if at all the equilibrium real GDP and the long-run equilibrium price level are affected by a reduction in the quantity of money in circulation Properly label this line. Carefully follow the instructions above, and only draw the required objects b. According to your graph, the equilibrium price level real GDP while the equilibrium Price Level RGDP...
6. The long-run effects of monetary policy Aa Aa The following graphs show an economy that is cur...
6. The long-run effects of monetary policy The following graphs show an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second shows the long-run (LR) and short-run (SR) Phillips curves. The point on each graph shows the economy's current position. According to the graphs, potential output in this economy is _______ and the natural rate of unemployment is _______ .Suppose the central bank of the economy decreases the...
QUESTION 5-1 Chapter 14 Suppose economy is in long run equilibrium. [Only one diagram is required...
QUESTION 5-1 Chapter 14 Suppose economy is in long run equilibrium. [Only one diagram is required for this question, draw and label clearly to show all relevant points and moves] a. [4 marks] Use the model of aggregate demand and aggregate supply to illustrate the initial equilibrium (call it point A). Be sure to include both-short run and long-run aggregate supply. b. [4 marks] The central bank raises the money supply by 10%. Use the diagram you drew in part...
20. From the short-run equilibrium at point B, suppose the aggregate demand remains un- changed and...
20. From the short-run equilibrium at point B, suppose the aggregate demand remains un- changed and there are no other shocks hitting the economy. The economy can adjust itself and move to the long-run equilibrium without policy intervention. Which of the following is true? A. The economy will return to the long-run equilibrium (point A), where the real GDP equals Y* and the price level is P*. B. The economy will move to a new long-run equilibrium, where the real...
6.The Aggregate Demand (AD) curve is obtained by combining: (a) The consumption function, planned investment and...
6.The Aggregate Demand (AD) curve is obtained by combining: (a) The consumption function, planned investment and the central bank's policy reaction function. (b) The consumption function and the Taylor rule. (c) The equation for PAE, the central bank's policy reaction and Y = PAE. (d) Y=PAE and the consumption function. (e) The equation for planned investment and the central bank policy reaction function. 7.The AD curve is generally assumed to have a negative slope. However, which of the following would...
Figure:
AD–AS
Refer to Figure: AD–AS. Assume that the economy
is in long-run equilibrium. If the Federal Reserve were to lower
the targeted federal funds rate we would most likely expect:
there will be a downward movement along the aggregate demand
curve AD1.
the aggregate demand curve will stay unchanged at
AD1.
the aggregate demand curve will shift to
AD3.
the aggregate demand curve will shift to
AD2.
LRAS Aggregate price level SRAS AD, AD AD, Y₂ YpY, Real GDP
QUESTION 31 Figure 13-5 shows the short-run macroeconomic equilibrium of an economy at Point A. In the figure, Point A suggests that: Figure 13-5 LRAS SRAS AD Real GDP a. the government should increase the level of taxes in the cconomy. b. the economy is operating with a recessionary gap c. the govemment should decrcase its budget d. the economy is operating at long-run equilibrium. e. the real value of currency in the economy is lower than its nominal valuc....
The figure to the right shows an economy in an initial long-run equilibrium at point A a Using the line drawing tool show how, if at all the equilibrium real GDP and the long run equilibrium price level are affected by a decrease in the value of the home currency in terms of the currencies of other nations Properly label this line Carefully follow the instructions above and only draw the required objects b. According to your graph, the equilibrium...
Suppose the central bank, instead of following the rule r =
r(Y,π), has a target level of inflation. Specifically, it sets r
according to r = rLR + b[π − π*]. Here rLR is the real interest
rate when the economy is in long-run equilibrium; that is, it is
the real interest rate that causes the loan market to be in
equilibrium when Y = �Y. In addition, π* is the central bank’s
target level of inflation, and b is...
The figure to the right shows an economy in an initial long-run equilibrium at point LRAS, aUsing the line drawing fool, show how, if at all the equilibrium real GDP and the long-run equilibrium price level are affected by a reduction in the quantity of money in circulation Properly label this line. Carefully follow the instructions above, and only draw the required objects b. According to your graph, the equilibrium price level real GDP while the equilibrium Price Level RGDP...
QUESTION 5-1 Chapter 14 Suppose economy is in long run equilibrium. [Only one diagram is required for this question, draw and label clearly to show all relevant points and moves] a. [4 marks] Use the model of aggregate demand and aggregate supply to illustrate the initial equilibrium (call it point A). Be sure to include both-short run and long-run aggregate supply. b. [4 marks] The central bank raises the money supply by 10%. Use the diagram you drew in part...
20. From the short-run equilibrium at point B, suppose the aggregate demand remains un- changed and there are no other shocks hitting the economy. The economy can adjust itself and move to the long-run equilibrium without policy intervention. Which of the following is true? A. The economy will return to the long-run equilibrium (point A), where the real GDP equals Y* and the price level is P*. B. The economy will move to a new long-run equilibrium, where the real...
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