Consider the open economy displayed in the figure to the right. Firms in this nation do import raw materials and other productive inputs from abroad, and foreign residents purchase many of the nation's goods and services. LRAS SRAS a. Using the three point curved line drawing tool, determine the most likely short-run effect on this nation's economy if there is a significant raw materials price inflation in other nations around the world. Label this line "Shock. shgck Carefully follow the instructions above, and only draw the required objects. A b. According to your diagram, the short-run effect upon the economy is A. a higher price level and an economic expansion. B. inflation and a lower real GDP. AD C. deflation and a lower real GDP. D. a lower price level and an economic recession. Real GDP per Year (S trilions) Price Level

Consider the open economy displayed in the figure to the right. Firms in this nation do import raw materials and other productive inputs from abroad, and foreign residents purchase many of the nation's goods and services. LRAS SRAS a. Using the three point curved line drawing tool, determine the most likely short-run effect on this nation's economy if there is a significant raw materials price inflation in other nations around the world. Label this line "Shock. shgck Carefully follow the instructions above, and only draw the required objects. A b. According to your diagram, the short-run effect upon the economy is A. a higher price level and an economic expansion. B. inflation and a lower real GDP. AD C. deflation and a lower real GDP. D. a lower price level and an economic recession. Real GDP per Year (S trilions) Price Level

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter7: Economic Growth: Theory And Policy

Section: Chapter Questions

Problem 1DQ

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The imaginary country of Harris Island has theaggregate supply and aggregate demand curves as Table24.3 shows. a. Plot the AD/AS diagram. Identify theequilibrium.b. Would you expect unemployment in thiseconomy to be relatively high or low?c. Would you expect concern about inflation in thiseconomy to be relatively high or low?d. Imagine that consumers begin to lose confidenceabout the state of the economy, and so ADbecomes lower by 275 at every price level.Identify the new aggregate equilibrium.e. How will the shift in AD affect the originaloutput, price level, and employment?
Please no written by hand solution Consider the following economic situations:C = $4.0 trillionI = $1.5 trillionG = $3.0 trillionT = $3.0 trillionNX = $1.0 trillionF = 0mpc = 0.8d = 0.35x = 0.15r = 1% λ = 0.5A. Calculate an expression for the IS, MP and AD curves ( r= ?, IS Y= ?, AD Y=?)B. Let AS curve be given by the relation: π = 6 + 1.5 (Y - 25.5) (i.e. the price shock is zero). What are the equilibrium values of inflation, output and the real interest rate(π, Y, r)?C. Suppose government purchases are raised from $3.0 trillion to $3.5 trillion. What are new short-run equilibrium inflation values, output and the real interest rate (π, Y, r}?D. Suppose a financial crisis begins, and ƒ increases ƒ = 3. (Assume government purchases are again as in part (a). What are the new short-run equilibrium values of inflation, output, and the interest rate (π, Y, r}?(Please solve all the parts with numerical steps so it could be practiced easily)
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S09.,hello, I know for sure that answer "positive supply shock; LRAS to the right," is wrong. ?
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A positive oil shock: Suppose scientists discover a new way to extract oil fromdeposits that were previously thought to be unrecoverable. Te extra supply ofoil leads oil prices to decline by $5 per barrel. Explain the efect on wages, theemployment-population ratio, and unemployment—all for the overall economy.