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- Using the “dynamic aggregate demand” and “dynamic aggregate supply” (DAD/DAS) model: draw a graph and discuss the effect of an adverse supply shock, such as a rise in oil prices. (Your answer should be 150 words ±10%)What efect would an aggregate demand shock have on the economy?Give typing answer with explanation and conclusion A beneficial supply shock is: Question 6 options: A shift down and to the left of the aggregate demand curve, leading to a fall in the price level and a decline in output and employment. A shift down and to the right of the aggregate supply curve, leading to a fall in the price level and a rise in output and employment. A shift in and to the left of both the aggregate supply and aggregate demand curves, leading to a decline in output and employment. A shift up and to the left of the aggregate supply curve, leading to a rise in the price level and a decline in output and employment. None of the statements are correct.
- What is positive supply shock? What are the few examples to positive supply shocks? What is the impact of positive supply shock on the aggregate demand?Using the “dynamic aggregate demand” and “dynamic aggregate supply” (DAD/DAS) model: (b) draw a graph and discuss the effect of an adverse supply shock, such as a rise in oil prices.Give an example of a demand shock and a supply shock and show how it may push output and employment away from their natural levels. Include a graph.
- If a natural disaster occurs in the US, this is an example of a A) stone cold shock B) negative aggregate demand shock C) negative real shock D) positive real shock E) None of the answers are correct.Assume the Australian economy is originally at the long-run equilibrium. An abrupt house price crash sends shockwaves throughout the economy. In response to such a shock, households bring their spending on durable goods to the bare minimum, while firms cancel all future upgrade or expansion projects. Required: (a) Explain how the long-run aggregate supply (LRAS), the short-run aggregate supply (SRAS) and the aggregate demand (AD) will be affected by the above shock. Clearly explain why such change(s) would occur. (b) Clearly explain how the above shock would affect the key macroeconomic variables (real GDP, unemployment rate and price level) in the short run. (c) In order to counteract the above shock, do you recommend the government to implement expansionary fiscal policy or contractionary fiscal policy? Clearly explain why. (d) Clearly explain what actions the government can undertake in order to implement the fiscal policy stance recommended in (c).What happened to the demand for rental cars during the first half of 2021? I.e., was there a positive or negative demand shock? What caused the shock?
- If the economy begins at an equilibrium at potential output, a negative aggregate demand shock has which of the following effects in the short-ru? a. output and prices increase and unemployment falls below the natural rate b. output and prices increase and unemployment rises above the natural rate c. output and prices decrease and unemployment rises above the natural rate d. output and prices decrease and unemployment falls below the natural ratessume that the Australian economy originally starts at the long-run equilibrium. The shock in focus is the introduction of robots to undertake manual tasks and replace low-skilled workers. In 2019, Oxford Economics forecasted that approximately 20 million jobs around the world could be replaced by robots by 2030. This trend will exert sweeping and profound impacts on economies around the world, including Australia. Required: Considering the shock above, point out how Aggregate Demand, Short-run Aggregate Supply and Long-run Aggregate Supply will be affected Explain clearly in words the reasons behind the effects on Aggregate Demand, Short-run Aggregate Supply and Long-run Aggregate Supply, as pointed out inAssume that the economy is operating at or near its long‐run aggregate Identify one negative consequence that would result from a positive demand shock and two negative consequences that would result from a negative supply shock.
