Most economists reason that an economy adjusts to inflationary and recessionary gaps slowly because are fixed in the short run. O Consumer preferences O Taxes O Wages O Supplies of most of the inputs
Q: Consider an economy vwith the follovwing aggregate demand (AD) and aggregate supply (AS) schedules.…
A: Given: AD Price level SRAS 5.1 95 3.5 4.9 100 3.8 4.7 105 4.2…
Q: Answer this question using the AS/AD model presented in the textbook. Which of the following would…
A: Natural level of output is the potential output of an economy. At this level of output, all…
Q: If the Naval Research Laboratory fired a chemist and the Environmental Protection Agency hired her…
A: The aggregate demand is the demand for the goods and services produced in the economy. The aggregate…
Q: The economy is able to self correct if: O prices and wages are flexible upward in recession O prices…
A: Economic self is the capacity of people and families to keep up with adequate pay to reliably meet…
Q: A recession accompanied by unemployment would O Shift the curve to the left O Sift the curve to the…
A: Recession: It refers to the situation under which the economy having less demand of the goods and…
Q: The curve that is sometimes called the "long-run aggregate supply curve" (vertical Y*) relates the…
A: The aggregate supply is the total amount of services and commodities that firms in an economic plan…
Q: Deflation typically occurs when O a) the overall level of prices falls. b) all prices in the economy…
A: Inflation is the consistent rise in general price level over period of time . And deflation is the…
Q: In a supply-driven economy, which of the following statements are correct? Select all correct…
A: To find : Correct statement regarding supply driven economy
Q: Use the following graph to answer the next seven questions. The graph depicts an economy where…
A: A recession in the worldwide economy brought down the demand for U.S. trades, so this part of…
Q: Which of the following would cause AD to shift inwards? Select one: a. a fall in the rate of…
A:
Q: Short-run macroeconomic equilibrium is when (Hint: Be careful! Be sure to return to the general…
A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…
Q: The figure below depicts the economy of Altrua, which is presently in equilibrium. Enter your…
A: A recessionary gap is when: total result is underneath possible result. In the event that there is…
Q: Now consider an economy in which the government lowers its spending. In the long run, the result…
A: The amount of money allotted by the public sector for the purchase of goods and the provision of…
Q: Assume that investment does NOT depend on the interest rate. A reduction in the money supply will…
A: When the investment does not depend on the interest rate, the money supply decreases, then there is…
Q: Output in an economy can be decreased by limiting the work week. using more machines. O adding more…
A: Limiting the work week leads to a lesser time of production process that leads to a lower level of…
Q: Question 4 Assume the economy's consumption and saving schedules simuitaneously shift downward. This…
A: Consumption refers to the use of commodities and services by the consumers. Savings is the amount of…
Q: When there ae no unplanned inventory changes, the economy in a short run equilibrium and in a long…
A: In an economy, unplanned inventory refers to the amount of output that left unsold withthe sellers.
Q: Question 2 If the economy is in equilibrium, how can a inflationary gap exist and how will producers…
A: An inflationary gap is said to exist when the economy is already operating at the full employment…
Q: The reason(s) why real GDP grows, in the long run, is that Select one or more: O imports increase. O…
A: Gross domestic product refers to the economic tool to measure the national income of the people.
Q: Consider the short-run aggregate supply curves in the graph at right. A movement from point A to…
A: The movement along the curve is caused by change in price level while the shift in the curve is…
Q: Why does an inflationary output gap lead to increased price levels? O a. Demand is too high O b.…
A: An inflationary gap is defined as the amount by which the actual GDP of the economy exceeds the…
Q: lumber mill in BC, Canada cut Canadian trees into ear, but ended in inventory only to be sold this…
A: Below points are to be considered: *Trees were cut in last year. *Sold for $322715 in the current…
Q: 8. Use the graphs provided to answer parts a-c a) Figure 10-4 b) Figure 10-5 c) Figure 10-6 LRAS…
A: The long run equilibrium is the point where the long run aggregate supply (LRAS), short run…
Q: Aggregate supply describes the O a) relationship between suppliers' spending and output. O b)…
A: The aggregate supply curve depicts the relationship between the producer's willingness to supply…
Q: The aggregate demand curve is represented by which of the following equations? O a) AD - Price level…
A: The measure that depicts the final value of goods and services being produced within an economy is…
Q: If prompted to describe fundamental beliefs about the economy, a Keynesian economist would state…
A: Keynesian economics refers to the different macroeconomic theories and models that explain how…
Q: PAE 6000 5900 Expenditure Line PAE 500+ 9Y 5500 5450 5000 500 45 5000 5500 6000 Y Refer to the…
A: In the Keynesian cross diagram, in the short run equilibrium output is equal to the point where the…
Q: What word does Keynes use to describe the difference between everything an economy produces and…
A: Keynesian economics is a macroeconomic economic concept that explains overall economic expenditure…
Q: Explain why the NBER reported that the 2008 recession began before real GDP had fallen for two…
A: To determine the real GDP the NBER committee calculated the the real GDP and the real GDI (gross…
Q: - economy described by the following equations: C 1,600 + 0.9 (Y - T) P800 G 1,600 X200 T 1,600…
A: All A, B &, C part solved below,
Q: Price level (GDP price index 2009 = 100) Potential 130 AS GDP 120 110 100 90 AD 160 165 17.0 Real…
A: In the diagram, the potential GDP is $16.5 trillion whereas the actual GDP is $16 trillion. So, the…
Q: AS' AS Price Level P2 P1 AD Y2 Y1 Real National Income The graph shows the effects of a significant…
A: When there is an increase in oil prices, the cost of production increases. So sellers will be less…
Q: during aggregat demand to decrease because a) household wealth decreased, leading to a decline in…
A: When stock prices decline, it decreases the wealth of the people. This reduces the purchasing power…
Q: An economy's aggregate demand curve is gven as AD6800.6SY, With an increase in foreign income, the…
A: AD is teh summation of all expenditure such as Consumption, investment, government spending and net…
Q: Only a change in the price level can cause shifts in both the aggregate expenditure line and the…
A: The aggregate demand is the line which shows the relation between the quantity demanded and the…
Q: When fighting a recessionary gap, central banks will elect one: O a Increase; decrease O b.…
A: Recessionary gap is created when aggregate demand falls in the economy. Government and central bank…
Q: 29) Suppose that from 2017 to 2018, unemployment went from 7.2 to 5.6% and inflation went from 2.17…
A: From the above information, we can say that in the year 2017-18 inflation and unemployment both…
Q: Price level (GDP price index, 2012-100) Pocential AS 130 GDP 120 110 100 90 AD 19.0 19.5 20.0 20.5…
A: The aggregate demand and the aggregate supply determine the macroeconomic equilbrium in an economy.…
Q: How are aggregate output and the real interest rate determined in competitive egulibrum? OA The…
A: Aggregate output: Aggregate output is the sum total of output that is produced in an economy during…
Q: Quèstion 4 Assume the economy's consumption and saving schedules simultaneously shift downward. This…
A: Disposable income is the sum of consumption and savings. Y = C + S
Q: 140 LRAS 135 AS AD 130 O 125 AS 120 - -- -- A- LRAS 115 110 AD 105 100 100 105 110 115 120 125 130…
A: Short run is a period of time in which some inputs are fixed and some are variables in the…
Q: Which of the following is an injection in the circular flow of income? O Investment O Taxes O…
A: The injections are economic factors (or variables) that help in increasing the output level in an…
Q: An inflationary gap is automatically closed by wages that shift the O a) rising; SRAS curve…
A: In an economy, inflationary situation arises when there is a shortage of output as the aggregate…
Q: Suppose that the value of the stock market experiences a sustained decline. In the short-run, O AD…
A: The aggregate demand is the downward sloping curve which shows the negative relationship between the…
Q: During the Great Recession, the U.S. aggregate demand curve shifted to the left, in part, because a)…
A: Recession refers to a period of time where fall in economic activity can be observed all across the…
Q: Which of the following will NOT shift the ADTT curve? O a. A rise in consumer confidence O b. A rise…
A: ADπ curve depicts the inverse relationship between π (i.e., inflation rate) and aggregate demand. An…
Q: Which of the following will NOT shift the ADTI curve? O a. A rise in government spending O b. A rise…
A: AD: Y= C+I+G+NX Y = National Income or output C= Consumption I = Investment G = Government Spending…
Q: b) Figure 10-4 Figure 10-2 „SRAS; LRAS| SRAS, SRAS, SRÄS, SRAS, SRĂS, AD AD Real GDP Real GDP At…
A: The aggregate demand is the curve which shows the relation between the quantity demanded and the…
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- The short run aggregate supply curve was constructed assuming that as the price of outputs increases, the puce of inputs stays the same. How would an increase in the prices of important inputs, like energy, affect aggregate supply?Parts d-e please a) There is an inflationary gap of $500 m in the full SR model, IS-LM; and I=450 + 0.25Y-1500i; C=350+.65 YD. Calculate the required to policy and show what will happen, cet. par., in the appropriate graph. b) Assume the economy is at YFE. In the full SR model, IS-LM, show what will happen if firm confidence falls, cet. par. What will happen to the components of the goods market? Use directional arrows to show and explain all these changes. Who should do what if FE is the goal of policy? c) We are in eqm in the full SR model, IS-LM. Following a single shock (so that only one curve shifts), cet. par., we see that the nominal interest rate has fallen and Y has risen then we know with certainty that the Fed has engaged in expansionary policy. True, False, or Uncertain? Show graph in i-Y space and explain fully. d) In the full SR model, IS-LM, we know that if to falls, cet. par., then the real Money Supply will increase. True, False, Uncertain? Explain. Show…Imagine there is a consumption smoother (also known as a PIH consumer) who expectsto live for another 40 years and to work for another 30 years. They just learned thatthey will receive a permanent pay increase from their job of $800. How much extra dothey consume this year? What is their marginal propensity to consume?
- Autonomous Consumption R535mMarginal propensity to consume is 0.75Investment Spending R322mGovernment Spending R300mImports R175m + 0.08YExports R283mTaxes = 0.1YFull employment level of output is R3 483m Calculate the value of induced imports in thiseconomy, given the equilibrium level of output.Define the terms recessionary gap and the inflationary gap. Why do they occur? Please frame your answer within the context of the COVID-19 impact in the economy.Macroeconomics: An economy is experiencing a high rate of inflation. The government wants to reduce consumption by $36 billion to reduce inflationary pressure. The MPC is 0.75. By how much should the government raise taxes to achieve its objective? A. $6 billionB. $12 billionC. $16 billionD. $9 billion
- Inventories typically increase starting at the beginningof recessions, and begin to decline near the end ofrecessions. What does this say about the relationshipbetween planned spending and aggregate output overthe business cycle?Imagine there is a consumption smoother (also known as a PIH consumer) who expects to live for another 40 years and to work for another 30 years. They just learned that they will receive a one-time bonus from their job $800. how much extra do they consume this year? what is their marginal propensity to consume?Autonomous Consumption R535mMarginal propensity to consume is 0.75Investment Spending R322mGovernment Spending R300mImports R175m + 0.08YExports R283mTaxes = 0.1YFull employment level of output is R3 483m Calculate the equilibrium level of income in this economy.
- 1Why low rate inflation is considered necessary for economic grwoth? Oa It does not affect the purchasing power of wages Ob. It indicates that the currency is in continuous demand by the people Oc taffects only the rich and not the poor Od itact as an incentive to boost in supply in the economy 2When the economy is in Keynesian macroeconomic equilibrium, planned investment is greater than actual investment. O a False O b. True 3Government fixes the floor and ceiling price which will not allow the producers to increase the price on their wish, this is a type of. O a Physical control called price pegging O b. Monetary policy control measures O. Physical control called price tagging Od. Fiscal policy control measures O e None 4Rising output coupled with falling prices is called stagflation O a. False O b. True 5The Value of marginal propensity to consume lies O a. O to 1 O b. Less than zero Oc -1 to 1 Od. Between O to 1 6The Central Bank way to control inflation is Oa Monetary policy…When an economy is experiencing a recessionary gap, the likely outcome is a) quickly rising output prices. b) an increase in the number of workers receiving employment -insurance benefits. c) the number of employment - insurance recipients being the lowest ever . d) consumers optimistic about the future.Please give a detailed solution with an explanation. Please double-check your sources and make sure the answer is 100% correct. Make sure ALL questions are answered too.Blank Answer #1:value of all goods and services produced in the economy in the base yearcost of a given market basket of goods and servicesvalue of all goods and services produced in the economy this yearBlank Answer #2:this year's pricesthe base year's pricesBlank Answer #3:value of all goods and services produced in the economy in the base yearcost of a given market basket of goods and servicesvalue of all goods and services produced in the economy this yearBlank Answer #4:this year's pricesthe base year's pricesBlank Answer #5:produced domesticallybought by consumers
