45. Suppose that there is a temporary fall in aggregate supply due to a drought. What happens in the long-run? (A) Higher prices cause permanent tensions, leading long-run aggregate supply to shift left, resulting in a lower natural rate of output. (B) Over time, as the drought conditions fade, aggregate supply rises and returns to the original natural rate of output. (C) Aggregate demand shifts right, so that prices are higher but long-run output is unchanged. (D) If the person you're dating enjoys Taylor Swift, dump them immediately.

45. Suppose that there is a temporary fall in aggregate supply due to a drought. What happens in the long-run? (A) Higher prices cause permanent tensions, leading long-run aggregate supply to shift left, resulting in a lower natural rate of output. (B) Over time, as the drought conditions fade, aggregate supply rises and returns to the original natural rate of output. (C) Aggregate demand shifts right, so that prices are higher but long-run output is unchanged. (D) If the person you're dating enjoys Taylor Swift, dump them immediately.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter23: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 3CQQ

See similar textbooks

Similar questions

Suppose the economy is operating at potential GDP when It experiences an increase in export demand. How might the economy increase production of exports to meet this demand, given that the economy is already at full employment?
If aggregate supply is vertical, what role does aggregate demand play in determining output? In determining the price level?
42. Suppose that there is a temporary fall in aggregate supply due to a drought. Whathappens in the long-run?(A) Higher prices cause permanent tensions, leading long-run aggregate supply to shiftleft, resulting in a lower natural rate of output.(B) Over time, as the drought conditions fade, aggregate supply rises and returns tothe original natural rate of output.(C) Aggregate demand shifts right, so that prices are higher but long-run output isunchanged.(D) If the person you’re dating enjoys Taylor Swift, dump them immediately
(a) Suppose the price level in an economy rises while the money wage rate remains constant. What happens to the quantity of real GDP supplied. How will this affect the aggregate supply or aggregate demand curve? What if the potential GDP increases? Which aggregate curve is affected and how? (b) Real GDP Consumption Planned Investment Government Purchases Net Exports $1,000 $1,000 $100 $150 -$50 2,000 1,900 100 150 -50 3,000 2,800 100 150 -50 4,000 3,700 100 150 -50 From the table data provided, answer the following questions. The numbers in the table are in billions of dollars. Show all calculations. a. What is the equilibrium level of real GDP? b. What is the Marginal Propensity to Consume? c. What is the multiplier value in this economy? d. If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? e. If the economy is…
10-3 Explain why shifts of the aggregate demand curve change the price level in the long run but do not change potential output 5. (Changes in Aggregate Supply) List three factors that can change the economy’s potential output. What is the impact of shifts of the aggregate demand curve on potential output? Illustrate your answers with a diagram.
1-What is the general relationship between a country's price level and the quantitiy of it's domestic output (Real GDP) demanded? Who are the buyers of real US GDP? 2- what assumptions cause the immediate -short-run aggregate supply curve to be horizontal? why is the long-run aggregate supply curve vertical? Explain the shape of the short-run aggregate supply curve . Why is the short-run curve relatively flat to the left of the full employment output and relatively steep to the right ? 3- why does a reduction in aggregate demand tend to reduce real output, rather than the price level? 4- Explain" unemployment can be caused by a decrease of aggregate demand or a decrease of aggregate supply ."In each case , specify the price level outcomes . 5- In early 2001 investment spending declined in the USA. In the 2 months follwing september , 11 2001 attacks on the US, consumption also declined . Use Ad-AS analysis to show the two impacts on Real GDP. 6- Using the concept of the multiplier ,…
1 As more of the nation s systems of river locks 1. As more of the nation’s systems of river locks become deficient, what is happening to the pace at which the U.S. production possibilities curve shifts outward over time? 2. How are deficiencies in the U.S. river system affecting the extent to which the U.S. long-run aggregate supply come shifts rightward each year? 1 As more of the nation s systems of river locks
3) Why the slope of the aggregate supply curve differs in the short-run and in the long-run? Why the long- run aggregate supply curve is vertical and why the short-run supply curve is upward sloping? Explain in detail.
16. Why is the aggregate supply curve completely vertical in the long run? A. Short-run business cycles do not affect short-run output. B. Aggregate supply is impossible to illustrate in the long run. C. A country’s total output will always be constant. D. A country’s total output is not affected by price in the long run.
The economy is in long run equilibrium. Congress’s passage of new laws significantly increasing the regulation of business. It is assumed that everything else stays constant. What do we expect in aggregate demand, short run aggregate supply aggregate supply in short run? And what happens in long run, and long run equilibrium price level and output? Explicitly state what happens to equilibrium price level and output in both short run and long run and how economy corrects from short run to long run.
Figure-1Refer to Figure-1, long-run equilibrium would be established by a(n) (objective C3) Question 6 options: increase of short-run aggregate supply to close the contractionary gap decrease of short-run aggregate supply to close the expansionary gap decrease of short-run aggregate supply to close the contractionary gap increase of short-run aggregate supply to close the expansionary gap
6- How does the aggregate demand curve change if aggregate demand increases in an economy? a) shifts left B) shifts to the right NS) slides down D) constant TO) slides up