8. Explain whether each of the following events will increase, decrease, or have no effect on long-run aggregate supply. A.) The United States experiences a wave of immigration.B.) Congress raises the minimum wage to $10 per hour.C.) Intel invents a new and more powerful computer chip.D.) A severe hurricane damages factories along the East Coast.

8. Explain whether each of the following events will increase, decrease, or have no effect on long-run aggregate supply. A.) The United States experiences a wave of immigration.B.) Congress raises the minimum wage to $10 per hour.C.) Intel invents a new and more powerful computer chip.D.) A severe hurricane damages factories along the East Coast.

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 2PA

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Similar questions

Use Table 26.3 to answer the following questions. Sketch an aggregate supply and aggregate demand diagram. What is the equilibrium output and price level? If aggregate demand shifts right, what is equilibrium output? If aggregate demand shifts left, what is equilibrium output? In this scenario, would you suggest using aggregate demand to alter the level of output or to control any inflationary increases in the price level?
14- Draw a fully labelled diagram to illustrate the changes in aggregate demand curve in the following situations given in part (a) below. a) (i) An increase in investment. (ii) An increase in imports. b) What do you mean by aggregate demand? How is it calculated?
Other things equal, what effects would each of the following have on aggregate demand or aggregate supply? In each case use a diagram to show the expectedeffects on the equilibrium price level and the level ofreal output.a. A reduction in the economy’s real interest rate.b. A major increase in federal spending for healthcare (with no increase in taxes).c. The complete disintegration of OPEC, causing oilprices to fall by one-half. d. A 10 percent reduction in personal income taxrates (with no change in government spending).e. A sizable increase in labor productivity (with nochange in nominal wages).f. A 12 percent increase in nominal wages (with nochange in productivity).g. A sizable depreciation in the international value ofthe dollar.
11. Explain why the following statements are false. A.) “The aggregate-demand curve slopes downward because it is the horizontal sum of the demand curves for individual goods.” B.) “The long-run aggregate-supply curve is vertical because economic forces do not affect long-run aggregate supply.” C.) “If firms adjusted their prices every day, then the short-run aggregate-supply curve would be horizontal.” D.) “Whenever the economy enters a recession, its long-run aggregate-supply curve shifts to the left.”
q. Consider the following scenarios and briefly explain how each scenario would affect short-run aggregate supply (SAS), long-run aggregate supply (LAS) or aggregate demand (AD) in Canada. In some situations, more than one may be affected. 1. Canada produces larger number of university graduates who possess higher levels of education and skill. 2. Depletion of resources cause increase in the prices of key inputs in production. 3. Canada’s trading partners experience higher rates of economic growth. 4. Increase in oil prices raises the value of Canadian dollar.
For each of the scenarios, please decide whether there will be an increase or decrease in short-run aggregate supply or if there will be no change. 1a. Changes in the healthcare market cause employers to pay significantly more for health insurance they provide employees. 1b. The price of lumber, a commodity, rises drastically due to the effect of heavy winter weather in the American Northwest, where much of the world's lumber is grown. 1c. The production of a new type of blade for their combine harvesters, a tractor used to harvest crops, has allowed wheat farmers, like Herbert, to increase productivity by 40%.
3. What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?
13 Which of the following would increase aggregate demand? Increase in savings. Increase in taxation. Decrease in consumption spending. Increase in government spending.
13. In recent months there have been lots of pent-up demand post lockdowns (e.g. many people who are flying for the first time since the lockdowns). supply bottlenecks that are preventing some items from being shipped to stores in a timely fashion. This definitely adds to the costs of resources (production). Now consider an aggregate demand/aggregate supply model with the x-axis showing real GDP and the y-axis showing the inflation rate. These events are going to cause shifts in both curves. What result can you definitely predict from the model? a. More unemployment b. Less unemployment c. More GDP d. Higher inflation rates
Explain using graph the effect of each event on the long-run aggregate supply.1. Congress raises the minimum wage to £10 per hour.
8. Economic fluctuations I The following graph shows the economy in long-run equilibrium at the expected price level of 120 and the natural level of output of $600 billion. Suppose the government increases spending on building and repairing highways, bridges, and ports. Shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the increase in government spending.
Which of the following would cause the long run aggregate supply to decrease?O. A civil war in the country leads to destruction of property and loss of life.O. The Federal Reserve purchases $500 million in bonds from the banks.O. An unusually low temperatures in the midwest results in fewer crops than last year.O. A major breakthrough in extraction (fracking) leads to more efficient drilling of natural gas.