Suppose an economy that is initially at full employment faces a substantial drop in exports. a....
Homework Answers
Aggregate demand = Consumption + Personal Investment + Government Spending + Exports - Imports
Exports and aggregate demand have a positive relationship with
each other. If exports falls, aggregate demand falls due to the
reason mentioned. It will shift aggregate demand backward as well
as downward causing price and output level to fall from P to P1 and
Y to Y1 respectively. When output produced in the economy falls,
less labor is needed to produce such level of output causing
employment level to fall from its natural level. 
Add Answer to:
Suppose an economy that is initially at full employment faces
a substantial drop in exports.
a....
I. The economy of Zarland is operating below the full-employment level of output with a balanced budget. (a) Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply, a...
I. The economy of Zarland is operating below the full-employment level of output with a balanced budget. (a) Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply, and aggregate demand, and show each of the following. (Gi) The country's current equilibrium output and price level, labeled Yj and PL1. respectively (ii) The full-employment output, labeled Yf (b) Ir Zarland increases government expenditures and taxes by equal amounts, can aggregate demand increase? Explain. (c) If Zarland decides to...
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...
1. The economy of Maxistan is currently in a recession. Show the current short-run equilibrium in a correctly lab...
1. The economy of Maxistan is currently in a recession. Show the current short-run equilibrium in a correctly labeled graph of the aggregate demand, short-run aggregate supply, and long run aggregate supply curves. Let Y1 represent current output, Yf represent full employment output, and PL1 represent the current price level. 2. Suppose interest rates are lowered. Show the effect this will have on the economy of Maxistan in your graph. Let Y2 represent the new output and PL2 represent the...
Assume that the following graph depicts aggregate supply and demand conditions in an economy. Full employment...
Assume that the following graph depicts aggregate supply and demand conditions in an economy. Full employment occurs when $5 trillion of real output is produced. The economy is currently in equilibrium at point A. 260 AS, 240 AS2 220 200 Price Level (average price) 180 160 AD2 140 120 ADA 100 0 2 3 7 8 Real Output (in trillions per year) Instructions: For parts (a) and (b) enter your answer rounded to the nearest whole number (a) What is...
This Question: 3 pts 26 of 30 (25 complete) Assuming the economy is initially at full...
This Question: 3 pts 26 of 30 (25 complete) Assuming the economy is initially at full employment, a decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run? OA. The price level will rise, and the level of GDP will be unaffected. OB. The price level will rise, and the level of GDP will fall OC. The price level will fall, and the level of GDP will fall, OD. The price level...
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.
The following graph shows the economy in long-run equilibrium atthe expected price level of 120...
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 a sudden and severe contraction in the
housing market reduces the value of homes and causes consumers to
spend less.Shift the short-run aggregate supply (AS) curve or the aggregate
demand (AD) curve to show the short-run impact of
the housing market slump.In the short run, the decrease in consumption spending
associated with the housing...
1. If the economy is at full employment, increases in government spending: A) have a multiplier...
1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...
2. Match the following terms with their definitions Answers Misperceptions Theory Exchange-rate effect Interest-rate effect Sticky-Wage Theory Full-employment output Options The production of goo...
2. Match the following terms with their definitions Answers Misperceptions Theory Exchange-rate effect Interest-rate effect Sticky-Wage Theory Full-employment output Options The production of goods and services that an economy achieves in the long run when unemployment is at its normal rate a. b. The short-run aggregate supply curve slopes upward because nominal wages are slow to adjust to changing economic conditions. When a fall in the U.S. price level causes U.S. interest rates to fall, the real value of the...
Suppose real output is initially at its full employment level. Using Aggregate Demand (AD)—Aggregate Supply (AS) framework, discuss the short-run and long-run effects of a decrease in government expe...
Suppose real output is initially at its full employment level. Using Aggregate Demand (AD)—Aggregate Supply (AS) framework, discuss the short-run and long-run effects of a decrease in government expenditure on the price level, real output, nominal wage rate and real wage rate under the following three alternative assumptions: nominal wages are fully flexible nominal wages are relatively slow to adjust nominal wages are completely rigid.
I. The economy of Zarland is operating below the full-employment level of output with a balanced budget. (a) Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply, and aggregate demand, and show each of the following. (Gi) The country's current equilibrium output and price level, labeled Yj and PL1. respectively (ii) The full-employment output, labeled Yf (b) Ir Zarland increases government expenditures and taxes by equal amounts, can aggregate demand increase? Explain. (c) If Zarland decides to...
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...
1. The economy of Maxistan is currently in a recession. Show the current short-run equilibrium in a correctly labeled graph of the aggregate demand, short-run aggregate supply, and long run aggregate supply curves. Let Y1 represent current output, Yf represent full employment output, and PL1 represent the current price level. 2. Suppose interest rates are lowered. Show the effect this will have on the economy of Maxistan in your graph. Let Y2 represent the new output and PL2 represent the...
Assume that the following graph depicts aggregate supply and demand conditions in an economy. Full employment occurs when $5 trillion of real output is produced. The economy is currently in equilibrium at point A. 260 AS, 240 AS2 220 200 Price Level (average price) 180 160 AD2 140 120 ADA 100 0 2 3 7 8 Real Output (in trillions per year) Instructions: For parts (a) and (b) enter your answer rounded to the nearest whole number (a) What is...
This Question: 3 pts 26 of 30 (25 complete) Assuming the economy is initially at full employment, a decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run? OA. The price level will rise, and the level of GDP will be unaffected. OB. The price level will rise, and the level of GDP will fall OC. The price level will fall, and the level of GDP will fall, OD. The price level...
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 a sudden and severe contraction in the
housing market reduces the value of homes and causes consumers to
spend less.Shift the short-run aggregate supply (AS) curve or the aggregate
demand (AD) curve to show the short-run impact of
the housing market slump.In the short run, the decrease in consumption spending
associated with the housing...
1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...
2. Match the following terms with their definitions Answers Misperceptions Theory Exchange-rate effect Interest-rate effect Sticky-Wage Theory Full-employment output Options The production of goods and services that an economy achieves in the long run when unemployment is at its normal rate a. b. The short-run aggregate supply curve slopes upward because nominal wages are slow to adjust to changing economic conditions. When a fall in the U.S. price level causes U.S. interest rates to fall, the real value of the...
Most questions answered within 3 hours.
-
At the start of a CD it is spinning at a rate of 525 rpm
(revolutions...
asked 4 minutes ago -
4. Without doing any calculations, predict whether the observed
∆T would increase, decrease or remain the...
asked 1 hour ago -
Based on the range, which of the following sets of scores has
the greatest variability? 3,...
asked 2 hours ago -
Ripples in a pond travel at a velocity of 3 m/s with one peak
passing a...
asked 2 hours ago -
A man stands on the roof of a building of height 13.0 mm and
throws a...
asked 2 hours ago -
The extent to which assets are financed by borrowed funds and
other liabilities is indicated by:...
asked 3 hours ago -
Explain in detail
Germany is the fifth largest economy
explain what goods and services Germany specializes...
asked 3 hours ago -
The density of platinum is 21.45 g/mL. If a cube of platinum
with a mass of...
asked 3 hours ago -
Accounts Receivable
Sales
A/R Posting
Extended Sales Invoice
Packing Slip
Compare invoice to packing slip 2...
asked 3 hours ago -
Michaella, age 23, is a full-time law student and is claimed by
her parents as a...
asked 3 hours ago -
Why are polymers not typically casted into products?
asked 4 hours ago -
When rolling a die 129 times, what is the probability of rolling
a 6 no more...
asked 4 hours ago