Price level (GDP price index 2009 = 100) Potential 130 AS GDP 120 110 100 90 AD 160 165 17.0 Real GDP (trillions of 2009 dallars) 15.0 15.5 17.5 In the figure above, the economy is at an equilibrium with real GDP of $16 trillion ar a price level of 110. At this point there is an inflationary gap. a recessionary gap. O price stability. a full-employment equilibrium. O an above full-employment equilibrium.

Price level (GDP price index 2009 = 100) Potential 130 AS GDP 120 110 100 90 AD 160 165 17.0 Real GDP (trillions of 2009 dallars) 15.0 15.5 17.5 In the figure above, the economy is at an equilibrium with real GDP of $16 trillion ar a price level of 110. At this point there is an inflationary gap. a recessionary gap. O price stability. a full-employment equilibrium. O an above full-employment equilibrium.

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 61P: Table 24.4 describes Santhers economy. Plot the AD/AS curves and identify the equilibrium. Would you...

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a. What is the equilibrium rate of real GDP? $ __ billion b. If full-employment real GDP is $800 billion, what problem does this economy have? multiple choice This economy has a recessionary gap. This economy has an inflationary gap. This economy does not have a problem. c. How large is the real GDP gap? $ __ billion
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You are given the following information about a closed economy with no government:Consumption = 115 + 0.6YInvestment = 550Use the above information to answer the questions that follow:Q.4.4 Is the equilibrium level of income also the full employment level of income? Explainyour answer.(3)
Table 2 shows elements in the national income accounts of an economy. Assume the economy is currently in equilibrium. Elements £ billions Consumption (total) 80 Investment 9 Government Expenditure 6 Imports 15 Exports 8 What is the current equilibrium level of income? What is the level of injections? What is the level of withdrawals? If national income now rises by £22 billion and as a result, the consumption of domestically produced goods rises to £80 billion. Calculate the marginal propensity to consume (MPC)What is the value of the multiplier? What is the value of the multiplier? Comment on the results in part (3) and (4).
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1) Assume that the real wage in an economy is held above equilibrium. a. Graphically illustrate how an increase in demand for labor will change the number of unemployed workers. Be sure to label the axes and the quantities of labor hired before and after the increase in demand . b. Explain in words what happens to the number of unemployed as a result of this change
(1A) Typically, if consumer and business confidence is falling then ________ and if consumer and business confidence is rising then ________. (a) AD shifts to the right; AD shifts to the left(b) AD shifts to the left; AD shifts to the right(c) AD does not shift; AD shifts to the right (1B) Consider the following table and identify equilibrium GDP. If the potential GDP is at 12.0, what can you conclude about price levels and the unemployment rate? Current Price Level Real GDP-quantity demanded per trillion Real GDP-quantity supplied per trillion 120 6.0 10.0 115 8.0 8.0 110 11.0 6.0 100 13.0 5.0 (A) The economy has stable price levels and low unemployment because it is operating above the potential GDP.(B) The economy has high unemployment but experiences stable price levels because the economy operates below the potential GDP.(C) The economy is experiencing rising price levels and has a low unemployment rate because it is operating…
Suppose the economy is self-regulating, the price level is 132, the quantity demanded of RealGDP is 4 trillion, the quantity supplied of Real GDP in the short run is 3.9 trillion, and thequantity supplied of Real GDP in the long run is 4.3 trillion. Is the economy in short-runequilibrium? Will the price level in long-run equilibrium be greater than, less than, or equal to132? Show the relevant graph and explain your answers.