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Malaysian economy is currently operating at natural level of output and government has decided to implement a stimulate package from RM20 billion to RM250 billion during the pandemic period. Discuss the effects of the event on price level,
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- Refer to the diagram. The initial aggregate demand curve is AD1 and the initial aggregate supply curve is AS1. In the long run, the aggregate supply curve is vertical in the diagram because: A) nominal wages and other input prices are assumed to be fixed. B) real output level Qf is the potential level of output. C) price level increases produce perfectly offsetting changes in nominal wages and other input prices. D) higher than expected rates of actual inflation reduce real output only temporarily.The aggregate supply curve for the long run is: Group of answer choices Represents potential output, full employment output and is a vertical line. a vertical line when output is plotted against the price level. Potential output for the economy. the full employment aggregate supply curve.Suppose that your economy is in long run equilibrium. The aggregate demand and aggregate supply in the market is represented by the following functions: AD:= 360 – 4Y AS: P = 20 + 4Y Something occurs in the economy and the aggregate demand changes to: AD: P = 400 – 4Y Calculate the inflation rate that occurs with the change in aggregate demand.
- Suppose that the U.S. economy is at full employment when strong economic growth in Asia increases the demand for U.S.-produced goods and services. How the U.S. price level and real GDP will change in the short run?Suppose the world price of steel falls substantially. The demand for labor among steel-producing firms in Pennsylvania will . The demand for labor among automobile-producing firms in Michigan, for which steel is an input, will . The temporary unemployment resulting from such sectoral shifts in the economy is best described as unemployment.Assume that the economy is in a full employment equilibrium. There is an improvement in overall technology for all firms. The following combination of events are likely to occur a output rises, prices fall b output falls, prices rise . c output rises, prices rise d output falls, prices fall
- "The oil price run - up of 2007 - 08 was caused by strong demand confronting stagnating world production. Although the causes were different, the consequences for the economy appear to have been very similar to those observed in earlier episodes, with significant effects om overall consumption spending and purchases of domestic automobiles in particular. The experience of 2007 - 08 should thus be added to this list of recessions to which oil prices appear to have made a material contribution". Oil price shocks have an evident impact on the short run aggregate supply curve. With the help of a graph demonstrate how rising oil prices affect the SRAS and explain what other factors can cause this shift.After the economy moves to its new short-run equilibrium, the price level is _ than before, real GDP is _ than before, and the unemployment rate is now _the full employment rate of unemployment. A)Higher; lower; above B)Higher; higher; below C)Lower; lower; above D)Lower; higher; below E)Lower; lower; equal to F)Higher; higher; equal toIn 1986, OPEC countries increased their production of oil. This caused the price level to rise. aggregate supply to shift right. unemployment to rise. None of the above is correct.
- The structural unemployment rate is 1.3 percent, the frictional unemployment rate is 2.1 percent, and the economy's current unemployment rate is 3.5 percent. The economy is: A.in an inflationary gap producing more than the potential real GDP. B.n a recessionary gap producing less than the potential real GDP. C.in a long run equilibrium. D.in an inflationary gap producing the potential real GDP.Assume that aggregate demand is unaffected by the oil price spike. After the economy has fully adjusted to the oil price spike, the long-run effect is (no change, an increase, a decrease) in aggregate output and (no change, an increase, a decrease) in the price level.The upward slope of the short-run aggregate supply curve is based on the assumption that: 1) Nominal wages and other resource costs do not respond to price level changes 2) Nominal wages and other resource costs do respond to price level changes 3) Nominal wages are greater than real wages 4) Nominal wages are less than real wages A fall in prices of imported resources will cause aggregate: 1) Supply to increase 2) Demand to increase 3) Supply to decrease 4) Demand to decrease
