Regarding the AS-AD Curve: Write down the relationship between the price level and output in the...
Regarding the AS-AD Curve:
Write down the relationship between the price level and output in the sticky wage model of aggregate supply. Describe what happens to real wages if the economy goes into a recession. Is this prediction supported by empirical evidence?
Homework Answers
The AD-AS framework in the stick wage model has positively sloped AS curve. Therefore as Price Level rises output supplied rises. If the economy goes into a recession then real GDP fall and since price is flexible so price falls. Therefore given sticky wages, Nominal Wage/Price which is Real Wage rises. But this has been rejected empirically and hence alternative propositions have been presented.
Add Answer to:
Regarding the AS-AD Curve:
Write down the relationship between the price level and output
in the...
An increase in foreign prices relative to the price level in the
An increase in foreign prices relative to the price level in the U.S. will cause: U.S. net exports to rise. US aggregate demand to fall. U.S.net exports to fallIf you are looking at a graph where a cumulative upward sloping curve plots the relationship between price level and output for suppliers, you are looking at a aggregate demand curve graph. aggregate supply curve graph. microeconomic supply graph.The economy has shifted and the quantity of the real GDP supplied has increased. What has potentially happened to aggregate...
Aggregate Demand AS IT Price Level LAD2 i I AD 10 Real GDP 1. Circle the...
Aggregate Demand AS IT Price Level LAD2 i I AD 10 Real GDP 1. Circle the correct answer: Based on the graph, the (flatter, steeper) aggregate supply curve results in a higher inflation and thus a (smaller, larger) multiplier effect. 2. Is this question true or false? If the aggregate supply curve is vertical, the multiplier will approach infinity. C False True What do you notice about the relationship between the real wage and the price level? Check all that...
The short-run aggregate supply curve shows the short-run relationship between the A. price level and quantity...
The short-run aggregate supply curve shows the short-run relationship between the A. price level and quantity supplied in one market. B. price level and total demand in the entire economy. C. price level and the willingness of firms to supply output to the economy. D. consumption level and the price level. Evidence about the behavior of prices in the economy suggests that changes in aggregate demand have a relatively （Large or small） effect on prices within a few quarters so...
When the price level falls, aggregate demand ______. decreases and the AD curve shifts leftward does...
When the price level falls, aggregate demand ______. decreases and the AD curve shifts leftward does not change, but the quantity of real GDP demanded decreases and a movement up along the AD curve occurs does not change, but the quantity of real GDP demanded increases and a movement down along the AD curve occurs increases and the AD curve shifts rightward When Europe trades with Mexico and goes into a recession, ______.
1. Which of the following is not a property of the aggregate demand curve? It shows...
1. Which of the following is not a property of the aggregate demand curve? It shows the relationship between the overall price level and level consumption. It shows the price level on the vertical axis and output on the horizontal axis. The aggregate demand curve slopes downward. It shows the relationship between the overall price level and the level of total demand. 2. When the price level increases people: feel more wealthy. have the same real value of assets, regardless...
Use the aggregate supply (AS) curve and aggregate demand (AD) curve below to determine the equilibrium price level and equilibrium real GDP for this economy.
Use the aggregate supply (AS) curve and aggregate demand (AD) curve below to determine the equilibrium price level and equilibrium real GDP for this economy.
If the price level decreases, then aggregate demand increase along the AD curve but the curve doesn’t shift. a. True b....
If the price level decreases, then aggregate demand increase along the AD curve but the curve doesn’t shift. a. True b. False The Long-run Aggregate Supply Curve (LRAS) can shift to the right because of: a. Discovery of more natural resources b. Development of more efficient technology c. Inviting more labor force through Immigration d. All of the above Which of the following may happen due to a crash in the stock market: a. AD curve may shift to the...
IV. Suppose an economy is in long run equilibrium. (a) Use the model of aggregate demand...
IV. Suppose an economy is in long run equilibrium. (a) Use the model of aggregate demand and aggregate supply to illustrate the initial equilibrium on a BIG and clearly labeled graph. Label the equilibrium point A. Be sure to include the short-run and long-run aggregate supply. (b) Household spending increases. Use your diagram to show what happens to output and the price level as the economy moves from the initial to the new short-run equilibrium (label it point B) (c)...
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.
1. Aggregate supply definitions The short-run aggregate supply curve shows: What happens to output in an...
1. Aggregate supply definitions The short-run aggregate supply curve shows: What happens to output in an economy when the government spends more money How firms respond to changes in interest rates Changes in output in an economy as the price level changes, holding all other determinants of real GDP constar The relationship between the price level and aggregate expenditure Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that The price...
Aggregate Demand AS IT Price Level LAD2 i I AD 10 Real GDP 1. Circle the correct answer: Based on the graph, the (flatter, steeper) aggregate supply curve results in a higher inflation and thus a (smaller, larger) multiplier effect. 2. Is this question true or false? If the aggregate supply curve is vertical, the multiplier will approach infinity. C False True What do you notice about the relationship between the real wage and the price level? Check all that...
IV. Suppose an economy is in long run equilibrium. (a) Use the model of aggregate demand and aggregate supply to illustrate the initial equilibrium on a BIG and clearly labeled graph. Label the equilibrium point A. Be sure to include the short-run and long-run aggregate supply. (b) Household spending increases. Use your diagram to show what happens to output and the price level as the economy moves from the initial to the new short-run equilibrium (label it point B) (c)...
1. Aggregate supply definitions The short-run aggregate supply curve shows: What happens to output in an economy when the government spends more money How firms respond to changes in interest rates Changes in output in an economy as the price level changes, holding all other determinants of real GDP constar The relationship between the price level and aggregate expenditure Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that The price...
Most questions answered within 3 hours.
-
The zero order reaction 2N2O→2N2+O2 has the rate constant k of
7.20×10−3 molL s. If the...
asked 1 second from now -
When you borrow money to buy a house, a car, or for some other
purpose, you...
asked 15 minutes ago -
Write a c program that finds the uncommon elements from two
array elements using pointers
only...
asked 21 minutes ago -
SQL help:
Design a database diagram for a database that stores information
about the Downloads that...
asked 1 hour ago -
In 1970s and 1980s, molecular biologists discovered that the
hormone testosterone, binds a receptor protein that...
asked 3 hours ago -
january 1 2010 road catering service purchase a piece of
equipment for 58000 which is expected...
asked 4 hours ago -
Explain Mertons concept of anomie is and what the
modes of adaptation to it are?
asked 4 hours ago -
Jamie is doing a survey at her school about whether the students
feel the cafeteria food...
asked 6 hours ago -
How many liters of 0.669 M KOH will be needed to raise the pH of
0.339...
asked 8 hours ago -
A liquid of density 1270 kg/m 3 flows steadily through a pipe of
varying diameter and...
asked 8 hours ago -
Questions: What should the American executive do?
'A visiting American executive finds that a foreign subsidiary...
asked 8 hours ago -
Activity based costing was introduced as an alternative to
absorption costing.
1. Discuss using illustration the...
asked 8 hours ago