Aggregate demand curve of an economy is given by AD = 50 - 0.2P, the long-run aggregate supply. LRAS, is 30 and the short-run aggregate supply is given by SRAS = 0.3 P (all output measures are in US$ billions and the price level is given as an index number). A negative demand shock shifts the aggregate demand curve to the left. The new AD curve is given by AD = 49 - 0.2P. Find the new short-run equilibrium. Find the output gap as a percentage. What is the unemployment rate based on Okun's Law if the natural rate of unemployment is 4%? Short-run equilibrium: Price level is and the output is US$ billions Output gap as a percentage is: %. Unemployment rate is: %.

Aggregate demand curve of an economy is given by AD = 50 - 0.2P, the long-run aggregate supply. LRAS, is 30 and the short-run aggregate supply is given by SRAS = 0.3 P (all output measures are in US$ billions and the price level is given as an index number). A negative demand shock shifts the aggregate demand curve to the left. The new AD curve is given by AD = 49 - 0.2P. Find the new short-run equilibrium. Find the output gap as a percentage. What is the unemployment rate based on Okun's Law if the natural rate of unemployment is 4%? Short-run equilibrium: Price level is and the output is US$ billions Output gap as a percentage is: %. Unemployment rate is: %.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Introduction To Macroeconomics

Section: Chapter Questions

Problem 3.4P

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