67. Suppose that there is a sudden drop in government spending. What happens to the economy in the short-run, assuming it was originally at its long-run equilibrium? (A) GDP and prices fall. (B) GDP falls and prices rise. (C) GDP and prices rise. (D) GDP rises and prices fall.
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- 19. Which action would cause the aggregate supply curve slope to change in the short run? A. high income taxes B. changes in profit C. shortages in a specific market D. free market28. Assume a country's government increases taxes and its central bank increases its administered interest rates. The actions will result in an increase in which of the following in the short run? (A) Aggregate demand (B) Aggregate supply (C) Investment spending (D) Unemployment (E) Inflation3. 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.
- Due to COVID-19 situations the oil prices fall in international market. Let’s assume that output starts at its natural level. What happens to Pakistan’s economy (output and price) in the long run? Explain your answers using graphs.Economic activity fluctuates in the short-run. Why is this the case? Please explain1)Potential output is the same as long-run aggregate supply. Select one: True False 2)An increase in the price level will cause a decrease in the aggregate amount of output supplied. Select one: True False
- Due to COVID-19 situations the oil prices fall in international market. Let’s assume that output starts at its natural level. What happens to the Pakistan’s economy (output and price) in the short run? Explain your answer using AS-AD graphs. What happens to Pakistan’s economy (output and price) in the long run? Explain your answers using graphs.Due to COVID-19 situations the oil prices fall in international market. Let’s assume that output starts at its natural level.What happens to country A's economy (output and price) in the LONG run? Explain your answers using graphs. (150words)In 2006, the economy of Aptonville had an aggregate demand and aggregate supply according to the following schedule: Price Level Aggragate Demand Shortrun Aggragate Supply 90 $1325 $1085 100 $1300 $1140 110 $1275 $1195 120 $1250 $1250 130 $1225 $1305 140 $1200 $1360 150 $1175 $1415 What was Aptonville’s short-run equilibrium output in 2006?
- Why do you think it is important for managers to understand the mechanics of short- and long-term supply and demand? Give examples of companies whose business has been helped or hurt by changes in supply or demand in the markets in which they have been competing.A6 “Commodity-rich Australia is one of the very few countries to receive an economic growth upgrade by the International Monetary Fund, after the global outlook was slashed due to war in Ukraine and soaring inflation.” (Financial Review, 11 April 2022). “Australia’s economy has received a boost from the surge in the price of commodities such as gas, iron ore, coal and wheat”, said IMF division chief for Australia, Harald Finger. a. Assume that Australia’s economy is in its medium-run equilibrium (i.e. Y_t = Y_n and u_t = u_n) where Y_t represents the level of output in year t; u_t is the unemployment rate in year t; u_n is the natural rate of unemployment. Use the multiplier model diagram to illustrate the impact on Australia’s GDP from an increase in net export due to increase in commodity prices. Show the output gap in your graph.Firm X, a leading manufacturer of rubber tires in country A, caters to almost one-third of the domestic tire market. The country was hit by a recession last year that caused the national output growth to be negative. Simon Reeds, the CEO of firm X, feels that these fluctuations in the business environment are short-lived and expects the economy to recover very soon. In spite of the recession, Simon feels that the firm can actually invest in expanding its facilities as it has sufficient cash flows to continue its operation during the crisis period. The firm's marketing head, Sandra Jones, counters this by saying that the firm is already losing sales due to the recession and they should not increase costs further by making large-scale investments in the present climate. Which of the following, if true, would support the CEO's claim? A. The government recently announced a plan to offer incentives to buyers in the car and household appliances market. B.…