15. Consider the AD/AS model, and suppose that the economy begins at potential output. Through the automatic adjustment process, the effect of a positive AS shock on real GDP will be reversed in the long run with a shift in rightward; AS rightward; AD leftward; AS leftward; AD leftward; Y* A) B) D) E)

15. Consider the AD/AS model, and suppose that the economy begins at potential output. Through the automatic adjustment process, the effect of a positive AS shock on real GDP will be reversed in the long run with a shift in rightward; AS rightward; AD leftward; AS leftward; AD leftward; Y* A) B) D) E)

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Classical Macro Economics And The Self Regulating Economy

Section: Chapter Questions

Problem 18QP

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Similar questions

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Review the problem in the Work It Out titled Interpreting the AD/AS Model. Like the information provided in that feature, Table 24.2 shows information on aggregate supply, aggregate demand, and the price level for the imaginary country of Xurbia. Plot the AD/AS diagram from the data. Identify the equilibrium. Imagine that, as a result of a government tax cut, aggregate demand becomes higher by 50 at every price level. Identify the new equilibrium. How will the new equilibrium alter output? How will it alter the price level? What do you think will happen to employment?
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Now assume that the contraction in the Singaporean economy is mainly driven by supply side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words