Question 24 One of the most important views expressed by classical macroeconomisls was thal O A. wages and prices are always rising. O B. supply creales its own demand. O C. wages and prices are inflexible. O D. demand creates its own supply.
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: un equilibrium. - The economy pictured in the given figure has a(n) mbination of inflation and…
A: As seen in the diagram, there are LRAS, SRAS and AD curve. In short run the SRAS and AD curve…
Q: Suppose the economy is in a long-run equilibrium.a. Draw a diagram to illustrate the state of…
A: a. The supply depends on price level of the economy. When price level increases, the suppliers…
Q: If the nation's capital stock increases which of following will be affected? O Long Run Aggregate…
A: The whole amount of capital employed in the production of goods and services, including factories,…
Q: Ral GDP the graph, we see that long-run aggregate supply decreased during the Great ession. This was…
A: The graph given above depicts an economy where the aggregate demand and the long run aggregate…
Q: If real GDP is $40 billion, the price level 30, and the velocity of money is 24, what does the…
A: Given data: Real GDP is $40 billion Price level is 30 Velocity of money is 24
Q: The period in the business cycde from a peak to a trough is a Select one: O a slump. O b. All of the…
A: When there is regular fluctuation in the business cycle can be seen that is if there are ups and…
Q: te te fgue belew to e de tiloning quention Figure 101 LRAS SRAS AD AD Real GDP a) At which point in…
A: Real GDP: - it is the inflation-adjusted value of all final goods and services produced in any…
Q: Which of the following is an example of a demand shock? O a change in the unemployment rate O a…
A: Demand shock: - the increase or decrease in demand due to a sudden event which is temporary is known…
Q: Which of the following is correct? Select one: Over the business cycle investment fluctuates more…
A: "For countries' economies, business cycles are an irregularity evident in the overall output. A…
Q: Aggregate Demand or Supply Shifts: Businesses expect weaker sales O D, no change; S, left; P, rise;…
A: Considering the business expectations, when the producers or sellers expect weaker sale in the…
Q: Consider an economy with the following aggregate demand (AD) and aggregate supply (AS) schedules.…
A: Below is the table: Graph generated from the given table.
Q: Countries like China and other developed economies are in the Neo classical zone. What is the best…
A: The short-run aggregate supply, or the curve of SRAS is being divided into three zones namely the…
Q: LAS SAS2 130 D SASI 120 SASO 110 A. 100 AD2 90 AD1 ADO 14 15 16 17 18 19 Real GDP (trillions of 2009…
A: Demand-Pull Inflation: Demand-pull inflation is a period of inflation that arises from rapid growth…
Q: Consider an economy with the following aggregate demand (AD) and aggregate supply (AS) schedules.…
A:
Q: Determine the effect on aggregate demand/ Short Run Agrregate supply of each of the following…
A: Hi there! Since you have posted a question with multiple sub-parts, we will solve the first three…
Q: (A) Price Level 100 100 100 (6) Price Level 110 100 95 (C) Reel GOP 275 250 Real COP 200 Renl Price…
A: Aggregate supply conveys the amount of final commodities and services that domestic producers are…
Q: Price el (GOP price inder, 200100) 30 10 100 17 Real GDP (o ef 20 dean 16 The figure above shows the…
A: Potential GDP means full employment level where economy using its factore and utilising in optimum…
Q: One of the most important views expressed by classical macroeconomists was that O A. supply creates…
A: Macroeconomists are the people who study the economy at an aggregate level.
Q: Keynesian economists believe that prolonged recessions are possible because Oa) prices are flexible…
A: Correct Answer (e) Prices are sticky and do not adjust quickly during economic downturns Because…
Q: An impact lag happens because O a) it takes time for the effects of monetary and fiscal policy to…
A: Since one or more regulatory bodies in most countries must authorize government spending or new tax…
Q: One difference between the Great Recession and the Great Depression is that a) there was significant…
A: The situation which depicts a downward trend in the business cycle that is being depicted by a…
Q: The decrease in aggregate demand during the Great Depression was caused, in part, by O a) higher…
A: The Great depression is regarded as one of the most harsh recession in the world economic history.…
Q: Quèstion 3 AS curve ( aggregate supply curve ) will shift right if O Natural disaster occurs.…
A: Aggregate supply curve shows the positive relationship between price level and real domestic output.
Q: Which of the following would likely be studied by a macroeconomist rather than a microeconomist? O…
A: When studying macroeconomics concepts, it can be said that these concepts have a significant impact…
Q: Illustrate and interpretthe short-run and longrun effects of temporary and permanentsupply shocks
A: Aggregate supply curve will be affected when there is supply shock or negative supply shock. Supply…
Q: The economy can go into recession if there is O A) a decrease in SRAS. B) an increase in AD. C) an…
A: We only answer one question so we will answer the first one. Please submit a new question specifying…
Q: Consider the following graph to answer the next five questions. Rual GOP Long run trend of GDP…
A: Business cycles are known as the fluctuations which are found in the normal functioning of an…
Q: Suppose the evening news anchor announces that "The Bank of Canada Raises the Target Overnight Rate…
A: Target overnight rate is the interest rate at which banks borrow and lend from one another in the…
Q: Prie ee AD AD Heal GDP FIGURE 23-4 Refer to Figure 23-4. Suppose the Canadian economy is initially…
A: Answer -
Q: (Figure: Short- and Long-Run Equilibrlum I) Use Figure: Short- and Long-Run Equlibrium . If the…
A: Long run equilibrium is achieved where LRAS = AD = SRAS . In Long run equilibrium economy is at…
Q: The lowest part of a recession is referred to as its. O a. Peak O b. Depression O. Boom Od. Trough
A: Business cycle can be seen in the following diagram
Q: GNen the following aggregate demand CaD) and aggregate supply šchedule.() PrIce level Real GDp Deman…
A: The expenditures in the economy relates to the entities, such as the households, the individuals,…
Q: Supply side economics says we should talk about "the economy" because can't explain incentives to…
A: The above question is about "Reaganomics" and the term Reaganomics states the economic policies of…
Q: Which of the following could potentially cause a recession? O AD increases, and wages are sticky. AD…
A: Recession is a period when real GDP is decreasing.
Q: AC.ADd 7. Draw the macroeconomy in equilibrium (snowflake). What happens when aggregate demand…
A: Aggregate demand(AD) is the total demand of goods and services for a given period in an economy. It…
Q: Price level (P) LAAS SRAS, -SRAS, AD AD, Real GDP Based on the graph, which points represent…
A:
Q: Consider an economy currently in recession economy, as discussed in class? O Raising the money…
A: Recession: It is an economic situation where the GDP falls for two or more consecutive quarters. It…
Q: Question 24 Information: LRAS SRASI SRAS2 P1 P2 P3 AD Yi Y2 Question: Starting from point B and…
A: Long Run Aggregate Supply Curve refers to a vertical line that shows the level of production that…
Q: B. Can policymakers use monetary policy (and/or fiscal policy) to accommodate this shock? Describe…
A: The covid-19 is a pandemic that has been spread throughout the world taking the lives of almost a…
Q: In the below graph, which of the following could cause a change from SRAS1 to SRAS2? Price level (P)…
A: Answer -
Q: A period during which aggregate output falls isknown as a(n) Select one: O a. inflation. O b.…
A: Recession occurs when there is a decline in the economic activities and spending in the economy. It…
Q: The trend of the economy is Select one: O a. the short run production capacity of an economy. O b.…
A: Answer is given below
Q: Which of the following shifts in aggregate demand and short-run aggregate supply would cause an…
A: The measure that depicts a general rise in the level of prices of goods and services in an economy…
Q: A technological advance leads to a shift in O a) both SRAS and LRAS. O b) only aggregate demand…
A: A technology advancement leads to a shift in Correct Answer: Option (a) both SRAS and LRAS This is…
Q: Question 32 Assume the economy is in short-run macro-equilibrium at E1. If the economy is allowed to…
A: The economies tend to operate with the motive of maximizing the level of their economic growth and…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Suppose firms become optimistic about futurebusiness conditions and invest heavily in new capitalequipment.a. Draw an aggregate-demand/aggregate-supplydiagram to show the short-run effect of thisoptimism on the economy. Label the new levels ofprices and real output. Explain in words why theaggregate quantity of output supplied changes.b. Now use the diagram from part (a) to show thenew long-run equilibrium of the economy. (Fornow, assume there is no change in the long-runaggregate-supply curve.) Explain in words whythe aggregate quantity of output demanded changesbetween the short run and the long run.c. How might the investment boom affect thelong-run aggregate-supply curve? Explain.If price level is held constant and we decrease consumption, the aggregate demand curve will shift to theSelect one:O a. NortheastO b. SouthwestO cc Neither A nor BReal GDP Real GDPDemanded, Price Level Supplied,Billions (Price Index) Billions$100 300 $450200 250 400300 200 300400 150 200500 100 100 Use these sets of data to graph the aggregate demandand aggregate supply curves. What is the equilibriumprice level and the equilibrium level of real output inthis hypothetical economy? Is the equilibrium real output also necessarily the full-employment real output?Explain.b. Why will a price level of 150 not be an equilibriumprice level in this economy? Why not 250?c. Suppose that buyers desire to purchase $200 billion ofextra real output at each price level. Sketch in the newaggregate demand curve as AD1. What factors mightcause this change in aggregate demand? What is thenew equilibrium price level and level of real output?
- Explain the concept of excess demand in macroeconomics. Also, explain the role of open market operation in correcting it. (Kinly explain with diagram)Explain the macroeconomics in the context of following;a. Aggregate supply and demandb. Shifts in the aggregate demand curvec. Inflation - causesa)What economic conditions would resultin a very steep IS curve . Briefly explain b) If an economy was in deep recession what type of demand side policy would be most effective when the IS curve is very steep?
- Refer to the following figure 1. For this economy, if the actual price level exceeds theexpected price level, how much output will the economyproduce in the short-run? A)$17 trillionB)$17.2 trillionC)$16.7 trillionD) Both A and C.2. Given the situation in part (a), this economy wouldexperience A) a recessionary gap of $0.3 trillionB) an expansionary gap of $0.2 trillionC) neither a recessionary gap nor an expansionary gap.D) an expansionary gap of $17.2 trillion. 3. Given the situation in part (a), in this economy (circlethe letter representing the right answer below)A) the actual rate of unemployment would be less than thenatural rate of unemployment.B) the actual rate of unemployment would be above the naturalrate of unemployment.C) the actual rate of unemployment would be equal to thenatural rate of unemployment.D)none of the above.4. In this economy, given the situation in part (a), in thelong-run (circle the letter representing the right answerbelow)A) the nominal wage…Possitive short run relatioship between the prices level for outpput and reall gdp holding the prices of inputs fexed a- longo-run aggregate supply SRAS curve b- long run aggregate demand SRAS curve c- short eun aggregate supply SRAS curve d- short-run aggregate demand SRAS curveSuppose the economy is in a long-run equilibrium.a. Draw a diagram to illustrate the state of theeconomy. Be sure to show aggregate demand,short-run aggregate supply, and long-runaggregate supply.b. Now suppose that a stock market crash causesaggregate demand to fall. Use your diagramto show what happens to output and the pricelevel in the short run. What happens to theunemployment rate?c. Use the sticky-wage theory of aggregate supplyto explain what happens to output and the pricelevel in the long run (assuming no change inpolicy). What role does the expected price levelplay in this adjustment? Be sure to illustrate youranalysis in a graph.
- Suppose that the policy-makers of a foreign country decide to enact policy that reduces unemployment (at the expense of higher prices) just before an election. At the time of the election, however, the reduction in unemployment is much greater than expected, and the pesky inflation increase never occurs. The graph illustrates the economy before the government attempts to reduce unemployment. Change the graph to illustrate changes in the economy that could result in lower unemployment without an increase in prices. Note that LRAS represents long-run aggregate supply, SRAS represents short-run aggregate supply, and AD represents aggregate demand.An economy is described by the following: C=20+0.9Y I=120-200r. Md=250+0.2Y-400r. Ms/P=1250 Y=70 W=17.5 Lf=144 a) Find AS and AD. b) Find the equilibrium level of Y and P c) Graphically represent this economy d) Find the long-run Y of this economy. e) What is the level of government expenses G, the government needs to impose in order to lead the economy to the full employment? (Show the long-run graphically).Legislation proposes that the government should use macroeconomic policy to achieve an unemployment rate of zero percent, by increasing aggregate demand for as much and as long as necessary to accomplish this goal. From a neoclassical perspective, how bill this policy affect output and the price level in the short nm and in the long run? Sketch an aggregate demand/aggregate supply diagram to illustrate your answer. Hint revisit Figure 26.4.