A major demographic change that has been affecting the U.S. is the wave of retirements among aging baby boomers (those born between 1946 and 1964). Combined with the relative decline in the number of young people entering the labor force, the retirement of many boomers will cause the labor force to grow more slowly and age.  Use the AD-AS model (along with a labor market graph) to show and explain how this will affect Y, N, W/P, and P over time.

Q: Graphically explain recessionary and inflationary gaps using AD and AS curves.

A: The below graph slows the recessionary gap and inflationary gap:

Q: CNBC on Jan 26, 2022 reports, “Federal Reserve points to interest rate hike coming in March".…

A:

Q: Using the AD/AS model, explain how each of the following hypothetical Government policies would…

A: Aggregate demand refers to the situation when the economy as a whole is considered to want something…

Q: What is the neoclassical zone of the SRAS curve? How much is the output level likely to change in…

A: A wide concept that relies on market forces as the key factors under the output, costing, and…

Q: What impact would a decrease in the size of the labor force have on GDP and the price level…

A: ANS If the labor force decreases then less number of labors will be available to works and thus the…

Q: Graphically derive and explain the AD curve

A: Aggregate demand is an economic measurement of the total amount of demand for all finished goods and…

Q: Using the dynamic AD/AS model, explain why Kennedy is concerned about the state of the global…

A: Aggregate Demand (AD) refers to the total demand for goods and services in an economy. Aggregate…

Q: A policymaker claims that tax cuts led the economy out of a recession. Can we use the AD/AS diagram…

A: A reduction in the tax rate will increase the AD, because individuals will have more money in their…

Q: According to a neoclassical perspective, in the long run, a surge in aggregate demand will most…

A: Equilibrium in the goods and services market occurs at the intersection of aggregate demand and…

Q: According to Prof Martin "An increase in government spending drives up or increases the private…

A: Crowding out effect appears when the government adopts the policy of expansionary fiscal policy and…

Q: Assume that an economy operates according to the sticky-wage model. The nominal wage was set to make…

A: In Macroeconomics, Sticky wage is a concept where nominal wage is resistant to change. Wages changes…

Q: Hayek says that markets will heal themselves and that government should not intervene. How does the…

A: Hi. Since there are two questions, we will answer the first one. Friedrich Von Hayek states that…

Q: Explain, using the AD-AS model, the effects of an increase in investment in the macroeconomy on the…

A: Macroeconomics is a sub-part of economics that is used to understand, the policies and fiscal…

Q: Using the AD/AS model, explain how each of the following hypothetical Government policies would…

A: When business environment is friendlier, it increases firm profitability. So firms increase…

Q: Suppose the level of structural unemployment increases. How would you illustrate the increase in…

A: Different types of unemployment have a different impact on the economic aggregated demand aggregate…

Q: If new government regulations require firms to use a cleaner technology that is also less efficient…

A: Aggregate demand: It refers to the total demand of an economy of various goods and services which…

Q: with the aid of a diagram  An increase in the price of oil is an example of a negative supply…

A: Oil is used in the most industries. It plays key role in deciding the transportation cost of goods.…

Q: Imagine that the AD curve intersects the AS curve in the Neoclassical Region and that the price of…

A: Given that the AD curve intersects the AS curve in the Neoclassical region and the price of oil…

Q: During the severe economic downturn during the great recession the federal government provided an…

A: According to Keynesian economics, the market outcome can be changed by the government intervention…

Q: An economist for the ruritanian ministry of economy recommends a tax to households of 20 billion.…

A: The aggregate demand(AD)-aggregate supply model is used to determine the equilibrium output level…

Q: What is the difference between the Keynesian zone, neoclassical zone, and intermediate zone in the…

A: Keynesian theory is a theory that promotes the government demand in order to increase the growth in…

Q: observed correlation between the price level and real GDP may be low because

A: The price level in an economy is negatively correlated to the real GDP.

Q: In a Keynesian economy, please show and explain how would reducing marginal tax rates affect income…

A:

Q: Briefly discuss the aggregate supply curve in the neoclassical model, including how the curve is…

A: Neoclassical assumes that over the end of the day , aggregate supply is vertical. or vertical level…

Q: An increase in the price of oil is an example of a negative supply shock. Draw and use the AD-AS…

A: Equilibrium in the goods and services market is reached where aggregate demand is equal to aggregate…

Q: Beginning in March 2013, federal government spending was resstrained due to the sequester (feel free…

A: Aggregate demand (AD): Aggregate demand broadly refers to the total demand for goods and services in…

Q: Beginning in March 2013, federal government spending was resstrained due to the sequester (feel free…

A: Federal spending: It is the spending by government and a part of aggregate demand. Aggregate Demand…

Q: importance of AD/AS models from a macroeconomic standpoint

A: Macroeconomics is that branch of economics that studies the aggregates of the economy such as…

Q: Policymakers who can influence AD cannot offset the adverse effects of a recession due to a fall in…

A: Aggregate supply is a macroeconomic variable, where the supply component is addressed. It includes…

Q: THE SIMPLE KEYNESIAN MACROECONOMIC MODEL CONCLUDES THE FOLLOWING ABOUT THE SOUTH AFRICAN ECONOMY

A: In the 30 months leading up to February 2006, it rose with a goal range of 3% to 6%.

Q: Between 2007 and 2009, the United States experienced a severe financial crisis and economic downturn…

A: Aggregate demand is a major macroeconomic variable affected by 4 components. These components…

Q: Hayek says that markers will heal themselves and that government should not intervene. How does the…

A: The aggregate supply curve shows the response of the aggregate supply to the fluctuations in the…

Q: Hayek says that markets will heal themselves and that government should not intervene. How does the…

A: The classical are the advocates of the non-interference of the government in the economy which is…

Q: Use the AD‐AS model graph to explain how the government can increase economic growth and reduce the…

A: Using the AS-AD model government can increase economic growth by expansionary fiscal policy. In…

Q: How is the natural rate of unemployment illustrated in an AD/AS model?

A: The natural rate of unemployment depicts the lowest rate of unemployment whereby there is either…

Q: Assuming a fall in price of oil, use the AD-AS framework to explain impact on prices, employment and…

A: The AD-AS model in economics is used to determine the equilibrium income level and price level in…

Q: Given the information in the extract, the Simple Keynesian Macroeconomic Model concludes the…

A: The primary premise of this school of thought is that government intervention can stabilise the…

Q: Explain by using the AD- AS diagram how in absence of any government intervention the economy may…

A: When there is no government intervention. At the new level of the equilibrium output since Y'<…

Q: Describe the full employment macroeconomic equilibrium in the ASAD models?

A: The aggregate demand–aggregate supply model, sometimes known as the AD-AS model, is a macroeconomic…

Q: Differentiate between the following terms. Assumptions in AD/AS models and assumptions in Keynesian…

A: Assumptions of the AD/AS model are: The market is self-regulated Prices of goods and services are…

Q: How to transform AR model into the ADF model?

A: In econometrics, a statistical model is said to be Autoregressive if it predicts the future values…

Q: How does AD/AS Model Incorporates Economic Growth, unemployment, and inflation. Identify periods of…

A: Aggregate demand refers to the amount of sales proceeds which an entrepreneur actually except from…

Q: Suppose an economy is hit by natural disaster and its natural resources decreases. Show graphically…

A: The AS-AD {"aggregate supply- aggregate demand"} model is described as a way of depicting the…

Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.