5. Keynesian three-part aggregate supply The following graph shows the three-part Keynesian aggregate supply curve hypothesized by Keynesians in the late 1940s. Aggregate supply GDP full I employment REAL GDP Indicate which part of the aggregate supply curve on the previous graph captures each of the following three situations. Flat Horizontal Part Upward Sloping Part Vertical Part All input markets "clear" Some, but not all, input markets experience shortages Recessions and depressions with stable prices Evaluate the following statement: True or False: The three-part Keynesian AS curve suggested the existence of a trade-off between inflation and unemployment. O False O True PRICE LEVEL

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A: Equilibrium in the goods market occurs at the intersection of aggregate demand and aggregate supply.

Q: 5. The aggregate supply curve is shifted rightward by an increase in tax rates. Answer: Reason:

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Q: 1. The Aggregate Demand curve shows the level of real output that the economy will purchase at each…

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Q: 7. Determinants of short-run aggregate supply The following graph shows a decrease in short-run…

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A: The economy is producing natural rate of output at long run aggregate supply curve.

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Q: 4. Show and explain the Keynesian and classical aggregate supply curves graphically. How does the…

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Q: 3. What effect would an increase in aggregate demand have on price levels and GDP?

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Q: 4. What effect would an increase in aggregate supply have on price levels and GDP?

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A:

Q: 2 / 2 104% |- 5. Describe the short-run and long-run effects on real output and the price level for…

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A: During the post-lockdown period, aggregate demand increased while the aggregate supply fell.

Q: 13 The economy is facing difficulty, and economists suggest that a recession has begun. If the…

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