In the AD/AS model, the wage-adjustment process is asymmetrical because... O a. Employers delay wage increases in a boom but lay off workers quickly during a slump. O b. Taxes rise quickly in a boom but do not fall during a slump. O c. Goods prices rise more quickly than factor prices. O d. Wages rise quickly in a boom but fall slowly during a slump. e. Factor prices are more volatile than goods prices.

In the AD/AS model, the wage-adjustment process is asymmetrical because... O a. Employers delay wage increases in a boom but lay off workers quickly during a slump. O b. Taxes rise quickly in a boom but do not fall during a slump. O c. Goods prices rise more quickly than factor prices. O d. Wages rise quickly in a boom but fall slowly during a slump. e. Factor prices are more volatile than goods prices.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 3SCQ: The short run aggregate supply curve was constructed assuming that as the price of outputs...

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Suppose an economy's macro equilibrium is such that a shift in either AD or AS (or both) to the right is desired. From this we can conclude that the economy may be experiencing O wartime production O economic growth O excess demand O unemployment
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?
Now assume that the contraction in the Singaporean economy is mainly driven by supply side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words (100 or less).
Now assume that the contraction in the Singaporean economy is mainly driven by supply side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words
Suppose, initially the Australian economy is atfull employment(in other words the economy is atthe potentialGDP). Using AD-AS model, explain how would each of the following events aectthe economy both in theimmediate and in the long term.a) A slowdown in China’s economic growth due to the sub-prime crisis in the US.b) Union wage settlements push the wage rate up.c) An increase in consumer confidence.
Why does the AD curve slope downward? Why does the AS curve slope upward? How is the AS/AD graph like a standard supply-and-demand dia-gram? How is it diferent?
Assume that an economy is initially operating at the natural rate of output (full employmentoutput). Use the AD-AS model to illustrate graphically the effects on price and output of areduction in government spending. Explain your assumptions with respect to the range ofaggregate supply of your analysis.
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According to Prof Martin "An increase in government spending drives up or increases the private sector investment." Explain this phenomenon using I S-LM model and evaluate its impact on AD-AS if any?
Describe reasons why the SRAS and/or LRAS may shift left or shift right. Holding AD constant, how would these actions tend to change the equilibrium price level and real GDP produced? (11.3)
Discuss how the AD/AS model can explain economic growth, recessions, as well as changes in unemployment and inflationary pressures. (11.5)
Mexico is experiencing a Recession due to decrease demand. Draw a correcly labeled AS/AD model representing where the economy is relative to the Natural Rate of Unemployment.