Use the dynamic AD-AS model to explain circumstances by which productivity and technological changes can lead...
Use the dynamic AD-AS model to explain circumstances by which productivity and technological changes can lead to an increase in unemployment. Discuss what happens to the price level depending on the assumptions you make.
Homework Answers
When there is productivity and technological advancement for
producing goods, firm owners would be able to produce goods in
lesser time possible which would raise the supply of goods and
shift the supply curve(AS) to its right from S to S1 while demand
remains the same at D. Equilibrium level shifts from point A to B
which reduces the price from P to P1 and raise the output level
from Y to Y1. As more goods are produced with more technical help
and at lesser price which reduces the demand for man made goods
which raises the unemployment level in the economy. 
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Use the dynamic AD-AS model to explain circumstances by which
productivity and technological changes can lead...
The AD-AS model can be used to analyze the effects of fiscal policy, including changes in...
The AD-AS model can be used to analyze the effects of fiscal policy, including changes in government spending or taxes. Suppose Congress votes to decrease corporate income tax rates. Use the AD/AS model to analyze the likely impact of the tax cuts on the macroeconomy. Show graphically and explain your reasoning. What exactly causes AD and/or AS to shift? What happens to GDP and the aggregate price level? Why?
Inflationary pressure in the AS-AD model can be shown as a leftward shift of the AD...
Inflationary pressure in the AS-AD model can be shown as a leftward shift of the AD curve when the economy is already producing at its potential GDP. supply shock that shifts the AS to the right. rightward shift of the AD curve when the economy is already producing at its potential GDP. Typically, if consumer and business confidence is high then ________ and if consumer and business confidence is low then ________. AD shifts to the left; AD shifts to...
Define demand-pull inflation. Using the AS/AD model, explain how demand-pull inflation affects the level of aggregate...
Define demand-pull inflation. Using the AS/AD model, explain how demand-pull inflation affects the level of aggregate output and the price level in the economy (which curve shifts, in what direction, and what happens to equilibrium output and price level). Give an example of macroeconomic policy that can be used to counter the effects of demand-pull inflation and discuss its effect on the equilibrium output and price level.
The economy is at point "A" according to the AD-AS model as depicted in the figure....
The economy is at point "A" according to the AD-AS model as depicted in the figure. By what mechanism will the economy return to Y* (assuming no policy intervention)? Nominal wage increases due to overemployment, increasing AD Nominal wage decreases due to unemployment, increasing AS The price level increases, leading firms to produce more and increase AS The price level decreases, leading consumers to consume more and increase AD Please explain the reason.
Q1. Phillip's Curve and AD-AS Model: Use assumptions below to set up an initial point denoted...
Q1. Phillip's Curve and AD-AS Model: Use assumptions below to set up an initial point denoted as the point A for a, b and c. For each of the following draw an AD/AS diagram and a corresponding Phillip's curve assuming the following: (1) Suppliers produce more goods and services when price increases (2) Actual GDP is 10,000_(3) Full employment GDP is 25,000 (4) The natural rate of unemployment is 5% and Actual unemployment is 10% (5) Discretionary policies are needed...
1. Use the Keynesian cross model and show graphically in which direction will equilibrium level of...
1. Use the Keynesian cross model and show graphically in which direction will equilibrium level of income (or output) change. For each of the following, write down the formula for the size of the change of income (i.e. write down the formula for ∆Y): (i) An increase in government purchases (ii) An increase in taxes (iii) An increase in government purchase and an increase in taxes of equal amount (Nb: You must draw a SEPARATE graph for parts (i) and...
Suppose Congress votes to decrease corporate income tax rates. Use the AD/AS model to analyze the...
Suppose Congress votes to decrease corporate income tax rates. Use the AD/AS model to analyze the likely impact of the tax cuts on the macroeconomy. Show graphically and explain your reasoning. What exactly causes AD and/or AS to shift? What happens to GDP and the aggregate price level? Why?
solve using attached graphs if neccesary (2) 140 points Use the standard short-run AD-AS model to...
solve using attached graphs if neccesary
(2) 140 points Use the standard short-run AD-AS model to answer this question. (Assume that all the taxes in this model are income taxes.) Economists do not agree on the cause of the 1991-92 recession in the U.S. The two most promising explanations are: (A) the "oil price shock" explanation, and (B) the "credit crunch" explanation. The oil price shock explanation says that when Iraq invaded Kuwait in the summer of 1990, this created...
Q3: Aggregate Suppy and Demand (a) If oil prices increase, use the AS-AD model to show...
Q3: Aggregate Suppy and Demand (a) If oil prices increase, use the AS-AD model to show how this increase in oil prices as an adverse supply shock. How would this affect, the price level? real GDP and unemployment. (b) What is a policy response the Fed could do to help alleviate the adverse shock in part (a)? Graph how this response would work? What are the associated trade-offs of the policy given the model?
Find and explain questions 1-3 Using an AD/AS model, describe what happens to the price level...
Find and explain questions 1-3
Using an AD/AS model, describe what happens to the price level and output in Canada in the short run as a major hurricane destroys important Canadian production plants. Assume that the economy starts in a long-and short-run macroeconomic equilibrium. a) Price and output increase. b) Price and output decrease. c) Price increases and output decreases. d) Price decreases and output increases. Using an AD/AS model, describe what happens to the price level and output in...
Define demand-pull inflation. Using the AS/AD model, explain how demand-pull inflation affects the level of aggregate output and the price level in the economy (which curve shifts, in what direction, and what happens to equilibrium output and price level). Give an example of macroeconomic policy that can be used to counter the effects of demand-pull inflation and discuss its effect on the equilibrium output and price level.
The economy is at point "A" according to the AD-AS model as depicted in the figure. By what mechanism will the economy return to Y* (assuming no policy intervention)? Nominal wage increases due to overemployment, increasing AD Nominal wage decreases due to unemployment, increasing AS The price level increases, leading firms to produce more and increase AS The price level decreases, leading consumers to consume more and increase AD Please explain the reason.
Q1. Phillip's Curve and AD-AS Model: Use assumptions below to set up an initial point denoted as the point A for a, b and c. For each of the following draw an AD/AS diagram and a corresponding Phillip's curve assuming the following: (1) Suppliers produce more goods and services when price increases (2) Actual GDP is 10,000_(3) Full employment GDP is 25,000 (4) The natural rate of unemployment is 5% and Actual unemployment is 10% (5) Discretionary policies are needed...
Suppose Congress votes to decrease corporate income tax rates. Use the AD/AS model to analyze the likely impact of the tax cuts on the macroeconomy. Show graphically and explain your reasoning. What exactly causes AD and/or AS to shift? What happens to GDP and the aggregate price level? Why?
solve using attached graphs if neccesary
(2) 140 points Use the standard short-run AD-AS model to answer this question. (Assume that all the taxes in this model are income taxes.) Economists do not agree on the cause of the 1991-92 recession in the U.S. The two most promising explanations are: (A) the "oil price shock" explanation, and (B) the "credit crunch" explanation. The oil price shock explanation says that when Iraq invaded Kuwait in the summer of 1990, this created...
Find and explain questions 1-3
Using an AD/AS model, describe what happens to the price level and output in Canada in the short run as a major hurricane destroys important Canadian production plants. Assume that the economy starts in a long-and short-run macroeconomic equilibrium. a) Price and output increase. b) Price and output decrease. c) Price increases and output decreases. d) Price decreases and output increases. Using an AD/AS model, describe what happens to the price level and output in...
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