24) Suppose the economy is at full employment and firms become more optimistic about the future...
24) Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment. Which of the following will happen in the short run? a. Aggregate demand will shift to the left. b. Output will decline. c. Unemployment will decline. d. Prices will decline.
Homework Answers
If the business is more optimistic about the future profitability they will obviously increases their investment expenditure. So they will hire more workers which would lead to a decrease in the unemployment. The increases in the investment increases the aggregate demand and the real GDP will increase.
Ans: C). Unemployment will decline.
Add Answer to:
24) Suppose the economy is at full employment and firms become
more optimistic about the future...
Consider an economy at full employment. If consumers and firms become less optimistic about the future...
Consider an economy at full employment. If consumers and firms become less optimistic about the future economy then O unemployment will rise O price levels will rise. O output will rise. If the economy is in an expansionary period, appropriate policies to pursue may include: O business investment incentives that shift the AD curve to the left. a reduction in government spending that shifts the AD curve to the left. O an income tax cut that shifts the AD curve...
1. Consider an economy at full employment. If consumers and firms become less optimistic about the...
1. Consider an economy at full employment. If consumers and firms become less optimistic about the future economy then a) price levels will rise. b) output will rise. c) unemployment will rise. 2. A ________ in an AD/AS diagram could explain a decrease in cyclical unemployment. a) shift in AS to the left b) shift in AD to the right c) shift in AS to the right 3. An AD/AS model showing equilibrium in the steep section of the aggregate...
Suppose the US economy is at Potential GDP. Then, consumers and firms become pessimistic about future...
Suppose the US economy is at Potential GDP. Then, consumers and firms become pessimistic about future economic conditions, and consumption and investment decrease. In response to the decline in consumption and investment, the FED increases the money supply. Congress responds as well approving an increase in government spending and tax cuts. Illustrate this sequence of events using an Aggregate Demand/Aggregate Supply graph. State what happens with Real GDP, Prices, and the Unemployment rate after monetary and fiscal policies are implemented.
Can I get small explanation on why each one is correct With the economy at full...
Can I get small explanation on why each one is correct With the economy at full employment, consumers and firms become more optimistic about the future economy and a. The output will rise b . The unemployment will rise. c. price levels will fall. In an AD/AS diagram, ________ could explain a rise in cyclical unemployment. a. a shift in AS to the left b. a shift in AS to the right c. a shift in AD to the right...
When the aggregate demand curve and the short-run aggregate supply curve intersect, a) the long-run aggregate...
When the aggregate demand curve and the short-run aggregate supply curve intersect, a) the long-run aggregate supply curve must also intersect at the same point. Ob) the economy must experience higher output than the natural level of output. o c) the economy must experience lower output than the natural level of output. o d) the economy is in short-run macroeconomic equilibrium. In a small economy in 2016, aggregate expenditure was $900 million while GDP that year was $750 million. Which...
Suppose an economy that is initially at full employment faces a substantial drop in exports. a....
Suppose an economy that is initially at full employment faces a substantial drop in exports. a. With the aid of a graph of aggregate demand and aggregate supply, explain the short-run effect of a substantial fall in exports on output, unemployment and price level.
Panem is a small open economy. Its residents has become more optimistic about their future. What...
Panem is a small open economy. Its residents has become more optimistic about their future. What will happen to Panem’s trade balance and real exchange rate? Explain using your own words and a figure.
18. Suppose businesses become more optimistic about their future profitability after a new businessfriendly president is...
18. Suppose businesses become more optimistic about their future profitability after a new businessfriendly president is elected. According to Ch. 3, the equilibrium level of investment spending (I) 4 a. will increase and the real interest rate (r) will increase. b. will not change and the real interest rate will increase. c. and the real interest rate will both be unchanged. d. will decrease and the real interest rate will increase
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
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 firms become pessimistic about future business conditions and cut back on investment spending. shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the business pessimism.
Suppose that the economy is at long-run equilibrium. a. Draw a diagram to illustrate the state of the economy. Be su...
Suppose that the economy is at long-run equilibrium. a. Draw a diagram to illustrate the state of the economy. Be sure to show aggregate demand, short-run aggregate supply, and long-run aggregate supply. b. Now suppose that a severe decline in the value of homes has affected the entire economy. Use your diagram to show what happens to output, employment, and the price level in the short run. Explain how households and businesses will adjust to this unanticipated shock to the...
Consider an economy at full employment. If consumers and firms become less optimistic about the future economy then O unemployment will rise O price levels will rise. O output will rise. If the economy is in an expansionary period, appropriate policies to pursue may include: O business investment incentives that shift the AD curve to the left. a reduction in government spending that shifts the AD curve to the left. O an income tax cut that shifts the AD curve...
Suppose the US economy is at Potential GDP. Then, consumers and firms become pessimistic about future economic conditions, and consumption and investment decrease. In response to the decline in consumption and investment, the FED increases the money supply. Congress responds as well approving an increase in government spending and tax cuts. Illustrate this sequence of events using an Aggregate Demand/Aggregate Supply graph. State what happens with Real GDP, Prices, and the Unemployment rate after monetary and fiscal policies are implemented.
When the aggregate demand curve and the short-run aggregate supply curve intersect, a) the long-run aggregate supply curve must also intersect at the same point. Ob) the economy must experience higher output than the natural level of output. o c) the economy must experience lower output than the natural level of output. o d) the economy is in short-run macroeconomic equilibrium. In a small economy in 2016, aggregate expenditure was $900 million while GDP that year was $750 million. Which...
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 firms become pessimistic about future business conditions and cut back on investment spending. shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the business pessimism.
Suppose that the economy is at long-run equilibrium. a. Draw a diagram to illustrate the state of the economy. Be sure to show aggregate demand, short-run aggregate supply, and long-run aggregate supply. b. Now suppose that a severe decline in the value of homes has affected the entire economy. Use your diagram to show what happens to output, employment, and the price level in the short run. Explain how households and businesses will adjust to this unanticipated shock to the...
Most questions answered within 3 hours.
-
The average length of time between arrivals at a turnpike
toll-booth is 26 seconds. What is...
asked 36 minutes ago -
(a) A piston at 6.1 atm contains a gas that occupies a volume of
3.5 L....
asked 1 hour ago -
Please answer true or false. Words
cannot be changed or added in to make it true...
asked 1 hour ago -
An empty test tube weighs 15.923 grams. Then,
MgCl2•6H2O is added into the test tube. After...
asked 1 hour ago -
Assume memory access is 10 units of time and disk access is
10000 units of time....
asked 2 hours ago -
1. Are all good samples random?
2. Magazines often report surveys giving statistics such as “63%...
asked 2 hours ago -
Under all the various types of market structures, firms
must eventually earn some economic profits for...
asked 2 hours ago -
Consider the following fitness regime for a single locus trait
with two co-dominant alleles: w11 =...
asked 2 hours ago -
A large cable company reports the following.
80% of its customers subscribe to its cable TV...
asked 2 hours ago -
Please answer the question in brief.
Discuss the role of ERP in organizations. Are ERP tools...
asked 2 hours ago -
Discuss the pros and cons of collaborative software such
as SameTime. Does it increase productivity? What...
asked 2 hours ago -
Buying your in-laws a gift because it’s expected is
due to the ____________ motive of gift-giving....
asked 2 hours ago