15) As the price level in the economy falls, which of the following sequence of events occurs? A) Md↑ = r↑ = IĮ = ADĮ C) Md↑ = 1↑= K→ ADĮ B) Mdį = ↑ = IĮ = ADĮ D) Mdį = rl =f→ AD↑
Q: Assuming Aggregate Demand and Aggregate Supply are initially at ADo and ASo respectively, which of…
A: The aggregate demand curve shows the total demand for all the finished goods and services in an…
Q: Moving to another question will save this response. Question 24 A leftward shift in aggregate supply…
A: A leftward shift in AS that is a result of decrease in aggregate supply.
Q: 3.a. Regrading the expected price, choose the correct math symbol below. PE ( ) 10 3.b. The actual…
A: Solving the question as per the given graph, where Long run and short run aggregate supply meet…
Q: Which of he following statements accurately explain the scenario illustrated by these diagrams?…
A: A is true as the original demand is ADo and original expenditure is AEo, the inflationary gap is of…
Q: 4. Suppose that, with the goal of stimulating aggregate demand in the next period (t + 1), the…
A: The aggregate demand curve shows the inverse relationship between price and the total quantity of…
Q: full employment output occurs at QA, then the aggregate demand is
A: Option c is the right answer C) Too great ,causing inflation gap Explanation:- Let's we have…
Q: 5. What is the level of Potential GDP in Spain? 6. What is the size of real GDP in the short run…
A: The total monetary or market worth of all finished goods and services produced inside a country's…
Q: Question 4 Suppose the U.S. economy can be described by an IS Curve with b = 1/6. In addition,…
A: Answer in Step 2
Q: The country of Merryville has an unemployment rate that is greater than the natural rate of…
A: If actual unemployment rate > natural unemployment rate, it means that Real GDP < Potential…
Q: Assume that prices are flexible upward but not downward. Decide the effect on the equilibrium price…
A: No new investment will be made until the capital depreciates and the stock of unsold goods runs out,…
Q: Refer to Figure 9.1. When the price level rises and causes lower consumption expenditures, it is…
A: In an economy aggregate demand curve shows the total output demanded by the households and other…
Q: Refer to the above diagram. Assume aggregate demand increased from AD1 to AD2. As a result of the…
A: The increase in aggregate demand from AD1 to AD2 shifts the aggregate demand curve to the right as…
Q: Choose the statement that does not describe Microeconomics. a. The effect of increasing the money…
A: Economics is the study of allocating the scarce resources efficiently and effectively. The three…
Q: Now consider the following economic conditions. (?) LRAS 140 130 SRAS 120 110 100 90 80 AD 70 60 60…
A: Meaning of Long Run Equilibrium: Long-run equilibrium is a situation when the Aggregate demand…
Q: Suppose gold (G) and silver (S) are substitutes for each other because both serve as hedges against…
A: The equilibrium price refers to the price that both the consumers and producers agree to pay and…
Q: 14- Draw a fully labelled diagram to illustrate the changes in aggregate demand curve in the…
A: Aggregate demand is downward sloping curve which shows inverse relationship between price and real…
Q: Refer to Figure 13.10. Cost-push inflation occurs if the aggregate supply curve shifts from AS1…
A: Cost-push inflation occurs if a) the aggregate supply curve shifts from AS1 to AS2. b) the economy…
Q: lots of pent-up demand post lockdowns (e.g. many people who are flying for the first time since the…
A: Answer in step 2.
Q: Your answer must be wrong," a fellow classmate says. "The question is asking about the long run, but…
A: Here, a student states that there will be change in price level as well as real output level, in the…
Q: Refer to the information provided in Figure below to answer the question that follow. AS 110 AD 600…
A: c . increase, increase
Q: Q. 4 For each of the following statements , show graphically and explain the expected effets of the…
A: The aggregate demand (AD) shows the negative relation between the price level and real GDP. It has…
Q: 4. Suppose workers' and firms' expectations of the price level and productivity are accurate. In…
A: Productivity: It refers to increase in the level of production of the firms. The increase in the…
Q: Changes in prices can be attributed to shifts in the supply curve, the demand curve, or both. In…
A: There are various factors that influence the demand and supply curve . following is the demand and…
Q: If a firm believes that their relative price has changed, then they will increase their output,…
A: The above given is a problem of Sticky price model which can be solved as follows:
Q: D2 D1 Do Quantity Refer to the figure above. Using the graph above and beginning on D1, a shift to…
A: Price: It refers to the cost of the goods and services on which these goods are available to the…
Q: e. none of the above is correct. 18. Suppose the economy is in long-run equilibrium. If there is a…
A: Meaning of Aggregate Demand and Aggregate Supply: The term aggregate demand refers to the…
Q: Suppose the aggregate demand and short-run aggregate supply schedules for an economy whose potential…
A: Recessionary Gap occurs when Real GDP is less than the Potential GDP. Due to recessionary gap,…
Q: 130 SRAS 120 110 100 90 80 AD 70 60 60 65 70 75 80 85 90 95 100 OUTPUT Given the economic conditions…
A: Given the situation of the AS-AD model:
Q: Which of the following is a FALSE statement? The only variable not held constant along the aggregate…
A: Aggregate demand curve: It is the sum total of all the final goods and services that are demanded…
Q: 1) Suppose gold (G) and silver (S) are substitutes for each other because both serve as hedges…
A: As given Demand for gold and silver is PG= 975 - QG + 0.5PS PS = 600 -QS + 0.5PG As also given that…
Q: 6. Critical analysis Q12 Consider an economy with the following aggregate demand (AD) and aggregate…
A: Part a ) The actual price level is difficult price level , entailing further adjustments.
Q: 3. Assume the aggregate demand curve is given by Y 11.5 – 0.6n and the aggregate supply curve by t =…
A: Answer - Inflation : - It is the increase in the price level of goods in a interval of time is…
Q: 2.1. In Figure 2 above, what are the factors that may cause the aggregate demand to shift from AD to…
A: 2.1 The shift from AD to AD1 shows the recessionary impact it's going to come thanks to any of the…
Q: Question #4. Individual income taxes directly affect personal disposable incomes which in turn…
A: Income is the money that an individual or business earns in exchange for providing a commodity or…
Q: a) Represent the above information in an appropriately labelled diagram. b) What are the short run…
A: In macroeconomics, economic fluctuations are generally studied using the concepts of the aggregate…
Q: Question 6n Firms become more optimistic about the economy and decide to buy more capital goods.…
A: Answer - "Thank you for submitting the questions. But, we are authorized to solve one question at a…
Q: Question 4 Refer to the information provided in Figure 12.1 below to answer the questions that…
A: Question 4. Given The graph where the economy is at point A and the economy will move to point D.
Q: Define any five macroeconomic terms: 1.Aggregate demand 2. Aggregate supply 3.fiscal policy…
A: "Since you have asked multiple questions, we will answer only first question for you, If you have…
Q: 6. Suppose political turmoil causes a significant decrease in oil production in the middle east. How…
A: In the middle East economy, it is given that the production of oil decreases due to political…
Q: 4. In aggregate operations planning, both pricing and promotion are options to shift demand to align…
A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…
Q: 6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of…
A: Sticky-Wage Theory: the sticky wage theory exhibits that the wages of the laborer remain unchanged…
Q: Refer to the information provided in Figure 11.4 below to answer the questions that follow. AS2 ASo…
A: Aggregate supply(AS) or total output is the curve which shows us the total products and services…
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
- Assume that the macro-economy is initially in short -run equilibrium. What happens to the equilibrium price level and equilibrium level of real GDP if interest rates in the economy fall? Question 4 options: a) Both the equilibrium price level and the equilibrium level of real GDP decrease. b) The equilibrium price level increases and the equilibrium level of real GDP decreases. c) Both the equilibrium price level and the equilibrium level of real GDP increase. d) The equilbrium price level falls and the equilibrium level of real GDP increases.Assume that the macro-economy is initially in short -run equilibrium. What happens to the equilibrium price level and equilibrium level of real GDP if households believe the economy is heading into a recession? Question 11 options: a) Both the equilibrium price level and the equilibrium level of real GDP increase. b) The equilibrium price level increases and the equilibrium level of real GDP decreases. c) Both the equilibrium price level and the equilibrium level of real GDP decrease. d) The equilibrium price level falls and the quilbrium level of real GDP increases.Question 7 The model of aggregate demand and aggregate supply Answer is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships. is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model. is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted. is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted. Question 8 When the price level falls the quantity of Answer consumption goods demanded rises, while the quantity of net exports demanded falls consumption goods demanded and the quantity of net exports demanded both rise. consumption goods demanded and the quantity of…
- 26. Assuming Aggregate Demand and Aggregate Supply are initially at ADo and ASo respectively, which of the following explains the adjustment towards long-run equilibrium depicted in Figure A? a) Unemployment (resulting from the short-run equilibrium being below LRAS) causes wages to decline, which increases AS until long-run equilibrium is attained at full employment level of income and a lower price level. b) Government spending is increased, increasing AD to a level sufficient to attain long-run equilibrium at full employment level of income and a higher price level. c) In attempting to produce beyond the economy's natural level of GDP, producers bid up wages and prices of other resources, causing the AS to decrease to the point where long-run equilibrium is restored. d) Taxes are increased reducing AD to a level consistent with long-run equilibrium.27. Assuming Aggregate Demand and Aggregate Supply are initially at ADo and ASo respectively, which of the following explains the adjustment towards long-run equilibrium depicted in Figure C? a) Unemployment (resulting from the short-run equilibrium being below LRAS) causes wages to decline, which increases AS till long-run equilibrium is attained at full employment level of income and a lower price level. b) Government spending is increased, increasing AD to a level sufficient to attain long-run equilibrium at full employment level of income and a higher price level. c) In attempting to produce beyond the economy's natural level of GDP, producers bid up wages and prices of other resources, causing the AS to decrease to the point where long-run equilibrium is restored. d) Taxes are increased reducing AD to a level consistent with long-run equilibrium.8) Suppose for reasons unrelated to your income, you decide to spend $1000 (in real terms) more this month than usual: a. The aggregate demand is likely to shift rightward by more than $1000 b. The aggregate demand is likely to shift rightward by $1000 c. GDP is likely to increase by $1000 d. The aggregate demand is likely to shift rightward by less than $1000
- 3. Most global markets have been reporting severe contractions, which mainly responding to the COVID-19 pandemic. The situation is worsened by the decrease in people’s confidence in the government as policymakers, spreading a wave of pessimism towards the future prospect of the economy. Explain how such wave of pessimism, ceteris paribus, may lead to short-term economic fluctuations, which will eventually work to push the economy back towards its long-run equilibrium. Use relevant diagrams to support your answer.Question #4. Individual income taxes directly affect personal disposable incomes which in turn affect the domestic demand for goods and services. Production costs depend substantially on oil prices. Market expectations are: (1) income taxes in the U.S. will decline and (2) oil prices will remain relatively unchanged. Using market expectations, what do you expect the U.S. output and prices next year? Assume we are moving from the old equilibrium to a new equilibrium. Please state clearly your assumptions and include a graph to support your answer.If aggregate supply is vertical, what role does aggregate demand play in determining output? In determining the price level?
- Question #4. Individual income taxes directly affect personal disposable incomes which in turn affect the domestic demand for goods and services. Production costs depend substantially on oil prices. Market expectations are: (1) income taxes in the U.S. will INCREASE substantially and (2) oil prices will remain relatively unchanged. Using market expectations, what do you expect the U.S. output and prices in the coming years? Assume we are moving from the old equilibrium to a new equilibrium. Please state clearly your assumptions and include a graph to support your answer.PQ 27 How does an appreciation of a country's currency affect its aggregate supply curves, when imported intermediate inputs are sizable?(1) Suppose the economy is in long-run equilibrium. If there is a sharp increase in the expected price level, what do we expect to happen? Select one: (A) In the short run, the SRAS curve will shift left, real GDP and price will fall. (B) In the short run, SRAS will shift right, real GDP will rise and prices will fall. (C) In the short run, AD will shift left, real GDP and prices will fall. (D) In the short run, LRAS and SRAS will shift left, causing real GDP to fall.