Assume an economy operates in the intermediate range of its AS curve (upward sloping AS curve). State the direction of shift in the AD or the AS curve for each of the following changes and the impact of that change on the price level, on GDP, and on employment. a) a rise in the price of crude oil b) an increase in the spending on national defense c) an increase in the cost of imported goods d) an improvement in labor productivity

Assume an economy operates in the intermediate range of its AS curve (upward sloping AS curve). State the direction of shift in the AD or the AS curve for each of the following changes and the impact of that change on the price level, on GDP, and on employment. a) a rise in the price of crude oil b) an increase in the spending on national defense c) an increase in the cost of imported goods d) an improvement in labor productivity

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter20: Aggregate Demand And Supply

Section: Chapter Questions

Problem 8SQP

See similar textbooks

Similar questions

Name some factors that could cause the SRAS curve to shift, and say whether they would shift SRAS to the right or to the left.
Name some factors that could cause AD to shift, and say whether they would shift AD to the tight or to the left.
How is pressure for inflationary price increases shown in an AD/AS model?
Suppose the aggregate demand equation for an economy is given by AD = 2000 - 50P, where AD represents aggregate demand and P represents the price level. Calculate the aggregate demand when the price level is $40.
Consider the AS/AD model. Moreover, suppose the economy is in Short-Run and Long-Run equilibrium.a. Illustrate the economy in an (x,y) plane where rgdp is on the horizontalaxis and the price level is on the vertical axis
Q33. Draw a basic AD and SRAS graph (with LRAS constant) that shows the economy in the long-run equilibrium. Suppose that the war between Ukraine and Russia sharply increased the price of petroleum, causing the unit cost per output in the economy to increase. ***If you have any trouble to draw a graph, you can answer the question without a graph. If then, your answer should include all the necessary steps, not just the final outcome. a. Using the AD-AS model, briefly analyze the short-run effects of the war on equilibrium real GDP and the price level, either with a AD-AS diagram or without a diagram. b. How does the economy adjust back to long-run equilibrium? Briefly explain (either with a AD-AS diagram or without a diagram).
Suppose the economy begins with output equal to its natural level. Then there is an increase in the supply of money. What are the immediate effects of a reduction in income taxes on the position of the AD, AS, IS, and LM curves in the SR. Could you help me with my Macroeconomics assignment? Thanks
Draw diagram of a typical IS-LMmodel and indicate the changes in all the variables on the diagram should there be an increase in aggregate expenditure causing a shift of the IS curve to the right ( indicate the shift in the IS curve on your diagram) Indicate where macroequilibrium will be and properly label the axes on the diagram. Briefly explain what you understand such an IS-LM model is actually reflecting in terms of macroeconomics
Assume the economy begins with potential real GDP = $13.7 trillion, while actual real GDP = $14 trillion and the Price Level (GDP Deflator) = 210 in the AD/AS model. A year later the Price Level = 212 and actual real GDP = $14.1. Based on their relative effects on the AD/AS model, which of the following scenarios best explains this new outcome? The effect of a(n) Group of answer choices: increase in consumer spending is MORE than the effect of a decrease in natural gas prices. increase in wages is LESS than the effect of an increase in consumption taxes. decrease in physical capital is LESS than the effect of a decrease in oil prices. increase in oil prices is MORE than the effect of negative business expectations.
When an economy's output increases and the price level decreases, the ___ curve has shifted to the ___. AD; right AS; left AD; left AS; right
Q27. Suppose the U.S. Congress passes significant immigration reform that makes it easier for foreigners to come to the United States to work. Use the AD/AS model to explain how this would affect the equilibrium level of GDP and the price level. A. Immigration reform as described should increase Aggregate Demand, shifting AD to the left, leading to a higher equilibrium GDP and a lower price level. B. Immigration reform as described should increase the labor supply, shifting AS to the right, leading to a higher equilibrium GDP and a lower price level. C. Immigration reform as described should increase the labor supply, shifting AS to the right, leading to a lower equilibrium GDP and higher price level.
Assume that the economy is initially operating at the natural level of output. Graphically illustrate (using the IS-LM-PC model) how the economy adjusts to a decrease in taxes both in the short run and in the medium run.