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Explain and demonstrate graphically the effects of a negative supply shock in both the short-run and long-run. (Hint: Use AD-AS framework)
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- Which is an example of a positive supply shock? Group of answer choices: Large decrease in input prices Strong collective bargaining from unions Strict environmental protection laws Larger increase in oil prices Suppose an economy experiences a positive supply shock. What is the short-run effect on output and the price level? Group of answer choices: Output and the price level both rise. Output and the price level both fall. Output rises and the price level falls. Output falls and the price level rises.Following an inflation shock, explain why unemployment goes up before the economy returns to medium-run equilibriumWhat is the fundamental tradeoff faced by The Fed when responding to a negative real shock? (Three sentences or less)
- The economy of Pakistan has faced both a supply demand shock in the first quarter of 2020. Using the AS/AD model explain how you expect the economy to behave in the short and long run.Oil price shocks have an evident impact on the short run aggregrate supply curve. With the help of a graph demonstrate how rising oil prices effect the SRAS and explain what other factors can cause this shift.Assume 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
- Assume 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.Starting from a long run equilibrium, without any policy intervention, the long run impact of a temporary adverse supply shock is that prices will: a. be permanently higher and output will be restored to its long run level. b. return to the old level and output will be permanently lower. c. return to the old level and output will be restored to its long run level. d. be permanently higher and output will be permanently lowe
- Classify each of the following as a supply shock or a demand shock. Use a graph to show the effects on inflation and output in the short run and in the long run. Financial frictions increase. Steel workers go on strike for four weeks. Households and firms become more optimistic about the economy. Favorable weather produces a record crop of soybeans and cotton in the Midwest.ssume 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 inWhich of the following events would not involve a supply shock that would shift the aggregate supply curve? (i) The Cosatu union disintegrates and the minimum wage is abolished. (ii) African bank plc’s bad debt creates a financial crisis and that leads to reduction in money supply. (iii) 2016 drought destroys half of the crops farmed. (iv) A tax on sugar is levied on companies that produce sugary beverages. Group of answer choices Only ii and iv are correct. Only ii is correct. Only iii and iv are correct. Only i and ii are correct.
