Figure 15.1 Price level 8 O O O O LRAS C A Y₁ D AD₂ SRAS1 AD₁ SRAS₂ Real GDP (billions of dollars) Refer to Figure 15.1. Suppose the economy is at point A. If consumer spending increases in the economy, where will the eventual long-run equilibrium be? A B
Q: A and B are competitors in the mobile phone industry. Both A and B have to decide whether to…
A: In game theory, each participant’s optimal action is set after considering the decision of other…
Q: Thuy Anh runs a small flower shop in the town of Florabunda. She is debating whether she should…
A: As a rational person and profit maximizer Anh would keep on hiring workers as long as MR > MC.…
Q: Annie is an excellent baker and Sam has a plentiful farm. If Sam trades eggs and butter to Annie for…
A: Trade refers to the exchange of goods, services, or resources between individuals, firms, or…
Q: a) Provide a graphical analysis of the effect of a temporary but persistent increase in total factor…
A: The RBC model is an economic structure for studying economic variations in closed economies that are…
Q: The JSE tracked firmer global peers on Wednesday as anxiety surrounding the global banking sector…
A: A mini banking crisis refers to a relatively small-scale financial crisis that affects a limited…
Q: Consider three different closed economies with the following national income statistics. Country A…
A: Aggregate demand refers to the total demand for commodities and services made by all the economic…
Q: Suppose that the exchange rate ($/Euro) is 1.10 on July 1st. Now suppose that the Federal Reserve…
A: With increase in money supply leads to decrease the interest rates as price of bonds increase. The…
Q: You sit down with the world's least helpful financial advisor who never tells you the future value…
A: Formula for annuity due (payments are made in the beginning of every period) F =…
Q: Private spending Price level 0 ON Q₁ Real Output B с Q1 Q₂ Real Output AE₂ -AE₁ -AD₂ AD₁ 7. Refer to…
A: Aggregate demand refers to the total amount of goods and services that households, businesses, the…
Q: 1. The price of a scoop of chocolate ice cream (x) is $2 and price of a scoop of vanilla ice cream…
A: The budget constraint is the locus of all affordable consumption bundles at the given income of the…
Q: You have $43,000 to invest in the stock market and have sought the expertise of Adam, an experienced…
A: When there are multiple compounding periods throughout a year, the effective annual interest rate…
Q: Directions: Read the speech first and answer the question that was asked below. He must do well…
A: In the given speech, the speaker discusses the role of a president in bringing about economic change…
Q: With the aid of diagrams, explain what it means for a firm to be a price taker.
A: Perfect competition: A firm in the competitive market is a price taker because it has large number…
Q: Real GDP per person is equal to: a. average labour productivity multiplied by the share of the…
A: Gross domestic product (GDP) is GDP given in basically the regular costs and refers back to the…
Q: Question 34 For the following output data, assume that the amounts of all nonlabour resources are…
A: When marginal product starts to decrease by adding on more unit of input, there comes a point of…
Q: we calculated the gains and losses from price controls on natural gas and found that there was a…
A: Demand refers to the quantity of a product or service that consumers are willing and able to…
Q: Tom, a math major, examines Jane's economics class notes and observes that when price- taking firms…
A: Tom's observation is correct. When price-taking firms earn economic profit, they do not necessarily…
Q: The demand and total cost functions for a monopoly firm are: Q(P) = 39.5 – 0.5P TC (Q) = 60 – Q +…
A: Fixed cost refers to the expenses that remain constant regardless of the level of production,…
Q: Compare graphically the behaviour of the current Average Productivity of Labour and Employment in…
A: In analyzing the behavior of the current Average Productivity of Labor (APL) and employment in the…
Q: (Figure: Market for Logs) A quota of 10,000 logs forest wood per month is placed in the market that…
A: Supply: The number of goods or services that producers are willing and able to offer at various…
Q: 4. Short-run and long-run effects of a shift in demand Suppose that the shrimp industry is in…
A: There are various factors that affect the demand and/or supply of a particular good and/or service.…
Q: Price $3.50 3 2.50 Supply Demand Demand + $1 tax 1,200 1,500 Quantity The graph above illustrates a…
A: Tax incidence refers to the distribution of the burden or impact of a tax between buyers and sellers…
Q: The ethanol industry is perfectly competitive, and each producer has the long-run marginal cost…
A: In perfect competition, There exists a large number of buyers and sellers. The firm will produce…
Q: Determine the Aggregate Supply if the Consumption is $80 and the Savings are $55
A: Aggregate supply is the total value of goods or services in a market, area or financial system…
Q: Why do we assume that changes to Total Factor Production are persistent? i know that its important…
A: Total Factor Productivity (TFP) is a measure of an economy's or an organization's productivity. It…
Q: How does the graph look for the effect of a temporary but persistent increase in total factor…
A: Total factor productivity is a term used to describe how effectively and efficiently inputs are…
Q: If the value of marginal propensity to save is 0.2 determine the exact value of investment…
A: Investment multiplier is denoted to be as the amount of generally the Income/Output amplifies…
Q: Suppose that the probability of breaking a collar bone is p = .05 and the cost of breaking a collar…
A: Given;-Probability of breaking collar bone=0.05Cost of breaking collar bone=$1000 To…
Q: Larry Summers has worn many hats over the years, one of which was Chief Economist of the World Bank…
A: Environmental economics understands the significance of combining sustainability issues into…
Q: Consider a small open economy with no perfect capital mobility whose Central Bank is targeting…
A: Bonds prices are the demand and supply forces acting in the bond market . Where the fresh demand…
Q: Suppose we instead tax the consumer rather than the driver. What happens in new equilibrium compared…
A: Shifting of tax refers to the transfer of the economic burden or incidence of a tax from the entity…
Q: Suppose a country has a real GDP per capita of $69,000 and grows at a constant rate for the next 49…
A: GDP per capita is calculated by dividing the total gross value contributed by all producers who are…
Q: The graph titled Soy Bean Market is a graph of the market for soy beans, a perfectly (purely)…
A: A Short-Run is defined as a concept which states that in a given period, at least one input or cost…
Q: Consider a small open economy with no perfect capital mobility and fixed exchange rate regime. If…
A: Bonds prices are the demand and supply forces acting in the bond market . Where the fresh demand…
Q: Consider a one period model in which a representative agent maximises the utility function: u(c,l)…
A: In this one-period economic model, we consider an agent who wants to maximize the utility derived…
Q: Rafe is optimally choosing to consume 6 apples and 3 bananas. The prices of apples and bananas are…
A: As the first order condition for the utility maximization problem is : MRS = Pa / Pb As, Pa = 7…
Q: How does the typical state budget process work, and what are the various actors involved in that…
A: There are 5 questions and since we are not allowed to solve more than 3, the first 3 questions are…
Q: Assume a society consists of two economic? groups: one group is rich and the other group is poor.…
A: Equity refers to fairness, justice, and impartiality in the distribution of resources,…
Q: and hence so the substitution effect is h₁ (p, u): = Ə Әр1 Əh₁ дрг -e(p, u) : = = 3 P2 3 2 2 = 4V 33…
A: SE and IE are two components of the effect of the price change. SE reflects the change in quantity…
Q: suppose a technology was developed that lowered the marginal cost of fishing. What would you expect…
A: Modernization always led to a reduction in the cost of production. Modernization refers to…
Q: Figure: Market for Logs) A quota of 10,000 logs forest wood per month is placed in the market that…
A: Quota restricts the quantity to be sold in the market
Q: Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and…
A: There are various factors that affect the demand and/or supply of a particular good and/or service.…
Q: What does it mean to “vote with your dollar,” and how does this relate to Walras’s theory of General…
A: Walras's theory of General equilibrium: A theory in economics that analyzes the simultaneous…
Q: A beneficial supply shock is: Question 6 options: A shift down and to the left of the aggregate…
A: A supply shock refers to sudden and significant changes in the availability or cost of key resources…
Q: 9. Problems and Applications Q9 Purchasing-power parity holds between the nations of Ectenia and…
A: An exchange rate is the value of one currency in relation to another currency. It is the rate at…
Q: 3. Illustrate graphically two different types of market failure. Draw the quantity of the good that…
A: Market failure refers to the situation when the market fails to function properly causing a…
Q: The benefit of saving is the: a. inflation rate b. real interest rate c. saving rate d. nominal…
A: Savings refers to the act of setting aside a portion of one's income or resources for future use…
Q: 3. Excess supply with union wages Consider the housing construction industry. Assume that the…
A: Answer: (1). The following graph shows the impact of wage increase from $15 to $20 per hour on the…
Q: Below is a supply curve for a slice of gourmet pizza. Illustrate on the graph the impact of a…
A: The supply curve is a graphical representation of the relationship between the price of a product…
Q: Thuy Anh runs a small flower shop in the town of Florabunda. She is debating whether she should…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Step by step
Solved in 3 steps
- . Suppose the economy is self-regulating, the price level is 132, the quantity demanded of Real GDP is 4 trillion, the quantity supplied of Real GDP in the short run is 3.9 trillion, and the quantity supplied of Real GDP in the long run is 4.3 trillion. Is the economy in short-run equilibrium? Will the price level in long-run equilibrium be greater than, less than, or equal to 132? Show the relevant graph and explain answers.Consider the following graph. The economy is currently at point D. Which point will the economy go to in long run if consumer confidence increases?An economy is described by the following equations: Cd = 1,600 + 0.8(Y – T) IP = 1000 G = 1,800 X = M = 0 T = 3,000 + 0.01Y What is the short-run equilibrium level of output in this economy? Group of answer choices 1.7600.5 2.7650.4 3.8420.5 4.9615.4
- Consider the economy described by the following equations: C = 1,600 + 0.9 (Y – T) I p = 800 G = 1,600 NX = 200 T = 1,600 Y* = 29,000 a. Complete the table shown below to find short-run equilibrium output. Consider possible values for short-run equilibrium output as they are given in the table below.Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. OutputY Planned aggregate expenditure (PAE) Y – PAE Y = PAE? 27,200 (Click to select) Yes No 27,400 (Click to select) No Yes 27,600 (Click to select) No Yes 27,800 (Click to select) No Yes 28,000 (Click to select) No Yes b. Short-run level of equilibrium output: c. What is the output gap for this economy? Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. The actual unemployment rate should…For each of the following, please explain each step and show it in the graph! a. Assume an economy is at full employment, but then consumer spending rises. What will most likely happen in the short run?The following graph shows a hypothetical economy in long-run equilibrium at an expected price level of 120 and a natural output level of $600 billion. Suppose the government increases spending on building and repairing highways, bridges, and ports.
- Suppose England's economy is in long-run equilibrium. As a result of the coronavirus, the British government orders all non-essential businesses to close and issue “shutter in” and other “stay at home” directives requiring its citizens and residents not to leave their residences absent emergencies and/or to purchase food and groceries from markets (that is, people cannot, for example, go to restaurants, movies or sporting events and the like.) If so, then we would predict that in the short-run England's A. real GDP will fall and the price level might rise, fall, or stay the same. B. real GDP will rise and the price level might rise, fall, or stay the same. C. the price level will rise, and real GDP might rise, fall, or stay the same. D. the price level will fall, and real GDP might rise, fall, or stay the sameAustria is one of the largest exporters of oil. At the end of 2019, the global price of oil fell substantially. For this question, treat oil as a final good, not an input into production. Begin at long-run equilibrium. this is all one question please answer everything! Now assume that the government did not intervene and instead allowed the economy to self-correct. As a result of the self-correction, AD ( increased,decreased,remained the same,changed ambiguously) SRAS ( increased,decreased,remained the same,changed ambiguously) LRAS ( increased,decreased,remained the same,changed ambiguously) GDP ( increased,decreased,remained the same,changed ambiguously)relative to before the crisis, unemployment relative to before the crisis, and the price level ( increased,decreased,remained the same,changed ambiguously)relative to before the crisis.( increased,decreased,remained the same,changed ambiguously)Suppose an economy is at the short run equilibrium which its current output level called Y1, is below the full employment output level called Yf. If the government does nothing, discuss how the economy restores its long run equilibrium level of output?
- For the following economy, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap. By how much would autonomous expenditure have to change to eliminate the output gap? C = 550 + 0.75 (Y – T ) I p = 200 G = 200 NX = 60 T = 180 Y* = 3,400 Instructions: Enter your responses as absolute numbers. Autonomous expenditure: 875Multiplier: 4Short-run equilibrium output: 3500 There is (Click to select) an expansionary output gap in the amount of 100.(DO THIS PART) Autonomous expenditure would need to decrease by________ to eliminate the output gap.The table below shows aggregate expenditure in the short-run, answer the following questions in the spaces provided below Aggregate output (Y) C I G Aggregate Expenditure AE 0 20 30 10 100 100 30 10 200 180 30 10 300 260 30 10 400 340 30 10 500 420 30 10 600 500 30 10 700 580 30 10 1 1 Mark What is the value of MPC 2 1 Mark What is the value of MPS 3 1 Mark What is the value of autonomous consumption (Ca) 4 1 Mark Write the consumption function 5 1 Mark What is the amount of equilibrium consumption 6 1 Mark What is the amount of saving when Y = 200 7 1 Mark What is the amount of autonomous expenditure 8 1 Mark What is the amount of equilibrium expenditure 9 1 Mark What is the size of expenditure Multiplier 10 1 Mark What is the value of…The United Kingdom’s economy is in short-run equilibrium with an output level at less than full employment. Using a correctly labeled aggregate demand and aggregate supply graph, show the following: Full employment output, labeled as Yf Equilibrium real output and price level, labeled as YE and PLE Assume that the UK government decreases domestic military expenditures. On the graph from question 1, show how the decreased military expenditures affect the following in the short run: Aggregate Demand Equilibrium real output and price level, labeled as Y2 and PL2. Is the UK government making a good decision in question 2? Why or why not? Explain using your good economic thinking skills!
