Aggregate supply and demand problems For each scenario analyze the impacy of the “shocks” on the nation’s employment rate, real GDP, GDP gap anf price level. In addition illustrate the impact of...
-refully Using aggregate supply and aggregate demand curves, illustrate and summarize what impact each of the would have on the price level and the equilibrium level of aggregate output in the short run. During a period of increasing aggregate demand, an economy experiences large gains in productivity.
sergate supply and aggregate demand curves, illustrate and summarize what impact each of the following a nave on the price level and the equilibrium level of aggregate output in the short run. (a) The economy is near capacity and the government increases government spending.
Refer to the table below Suppose that aggregate demand increases such that the amount of real output demanded rises by $7 billion at each price levela. By what percentage will the price level increase?Will this inflation be demand-pull inflation or will it be cost-push inflation?b. If potential real GDP (that is, full-employment GDP) is $510 billion, what will be the size of the positive GDP gap after the change in aggregate demand?c. If government wants to use fiscal policy to counter...
The following table shows the initial level of aggregate demand (AD) and te supply (AS) for the economy of Adanac. The full-employment level of output is $500 billion. a. Draw the corresponding initial aggregate demand and aggregate supply curve (AD0 and AS0). b. What is the initial equilibrium price level and level of real GDP? c. At this initial equilibrium (AD0 and AS0), is Adanac experiencing either a recessionary or inflationary gap? If so, how large a gap exists? d. Suppose the aggregate demand in...
1. In addition to the price level, what does the aggregate demand and aggregate supply model focus on? a. real GDP b. nominal GDP c. the real interest rate d. stock prices 2. Which statement best characterizes the long-run aggregate-supply curve? a. It is horizontal. b. It shows a positive relationship between price level and output. c. It demonstrates the importance of money in the economy....
1. Explain what will happen to the price level real GDP and the unemployment rate in the following cases: a. AD falls by the same amount that SRAS rises b. AD falls by less than SRAS rises c. AD falls by more than SRAS falls d. AD falls by the same amount that SRAS falls e. AD falls by less than SRAS falls 2. Explain how expectations about future sales will affect investment. 3. How will a change in the...
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.
According to classical economics: both real GDP and price level are determined by aggregate supply. both real GDP and price level are determined by aggregate demand. real GDP is determined by aggregate demand, while the equilibrium price level is determined by aggregate supply. real GDP is determined by aggregate supply, while the equilibrium price level is determined by aggregate demand. price level cannot be changed as prices and wages are perfectly rigid. All members of the Federal Board of Governors...
The data below represents the price level, the aggregate demand, and the aggregate supply data for an economy. Use the data points to plot an aggregate demand curve and aggregate supply curve for this economy. Each curve is labeled as AS (Aggregate Supply) or AD (Aggregate Demand) and each point is labeled as a, b, or c from the table headings. 60 Price Level Aggregate Supply (AS) Aggregate Demand (AD) 20 $800 $1,400 $1,000 $1,000 100 $1,200 $600 Provide your...
Long run aggregate supply is the relationship between the quantity of real GDP supplied and the price level when the maintain full employment changes in step with the price level to O A. money wage rate OB. quantity of money OC. real wage rate OD. interest rate supplied and the when the money wage rate, the prices of other resources and Short run aggregate supply is the relationship between the quantity of potential GDP remain constant O A real GDP...