Question 9 given by the demand curve, Consider the market for steel in the US. Steel demand in the US is p = 100 – Q. Steel supply to the US comes from domestic and foreign firms, Q' = qis+ q. The US steel firms can supply steel at a constant unit cost of 20, per ton, and thus the US supply curve is a horizontal line at p = 20. The aggregate supply curve for foreign steel, however, is upward sloping and given by = p. Note: As this is a competitive market, the equilibrium price and quantity of steel in the US market is found by equating demand to the sum of US and foreign supply. (a). What is the equilibrium price, p", for steel? How much is supplied by US firms, T? How much is supplied by foreign firms, q? (b). to s = 10 per unit produced. Suppose that the US government pays a subsidy to US steel producers equal What is the new equilibrium price paid by steel consumers in the US? How much steel is sup- plied by US firms and how much is supplied by foreign firms? (c). the steel subsidy. Explain in words the two sources of deadweight loss from the introduction of

Question 9 given by the demand curve, Consider the market for steel in the US. Steel demand in the US is p = 100 – Q. Steel supply to the US comes from domestic and foreign firms, Q' = qis+ q. The US steel firms can supply steel at a constant unit cost of 20, per ton, and thus the US supply curve is a horizontal line at p = 20. The aggregate supply curve for foreign steel, however, is upward sloping and given by = p. Note: As this is a competitive market, the equilibrium price and quantity of steel in the US market is found by equating demand to the sum of US and foreign supply. (a). What is the equilibrium price, p", for steel? How much is supplied by US firms, T? How much is supplied by foreign firms, q? (b). to s = 10 per unit produced. Suppose that the US government pays a subsidy to US steel producers equal What is the new equilibrium price paid by steel consumers in the US? How much steel is sup- plied by US firms and how much is supplied by foreign firms? (c). the steel subsidy. Explain in words the two sources of deadweight loss from the introduction of

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 3QR

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Refer to the table below. Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 Instructions: Enter your anwers as whole numbers. A). What is the equilibrium level of output? What is the equilibrium price level? B). Suppose that aggregate demand increases such that the amount of real output demanded rises by $ 7 billion at each price level. Insert the new values for real output demanded in the table below. Real Output Demanded, Billions New Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 What is the new equilibrium level of output? What is the new equilibrium price level? By what percentage will the price level increase? Will this inflation be demand-pull inflation or will it be cost-push inflation? C) If potential real GDP ( that is, full-employment GDP) is $ 510…
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PQ 27 How does an appreciation of a country's currency affect its aggregate supply curves, when imported intermediate inputs are sizable?
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Consider the following economy: Labor supply: Nt= 90 Capital stock: Kt = 90 Government spending: Gt = 20 Tax collections: Tt = 20 Production function: Yt = 2(Kt)0.5 (Nt)0.5 Real money demand Lt = 2Yt - 200rt Consumption function: Ct = 16 + 0.8(Yd)t Domestic price level: Pt = 4 Investment function: It = 25 - 50rt Nominal money supply: Mt = 1296 QUESTIONS: Find an expression for the IS curve. Find an expression for the LM curve. Find an expression for the aggregate demand curve. What are the short run equilibrium values for output, interest rate and price level? Plot (a)-(d) on the IS-LM and AD-SRAS-LRAS diagrams. Make sure to label (i) the axes, (ii) the curves and (iii) the initial equilibrium levels. Is this a short-run level of output also a long-run equilibrium? Explain. Suppose that the government the Fed increases money supply to Ms=1620. Find the new short-run equilibrium levels of output and interest rate Find the long-run equilibrium levels of output, interest rates and…
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Suppose the aggregate demand and short-run aggregate supply schedules for an economy whose potential output equals $2,700 are given by the table. Aggregate Quantity of Goods and Services Price Level Demanded Supplied 0.50 $3,500 $1,000 0.75 3,000 2,000 1.00 2,500 2,500 1.25 2,000 2,700 1.50 1,500 2,800 What is the short-run equilibrium level of real GDP"
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Labor supply: Nt= 90 Capital stock: Kt = 90 Government spending: Gt = 20 Tax collections: Tt = 20 Production function: Yt = 2(Kt)0.5 (Nt)0.5 Real money demand Lt = 2Yt - 200rt Consumption function: Ct = 16 + 0.8(Yd)t Domestic price level: Pt = 4 Investment function: It = 25 - 50rt Nominal money supply: Mt = 1296 QUESTIONS: Find an expression for the IS curve. Find an expression for the LM curve. Find an expression for the aggregate demand curve. What are the short run equilibrium values for output, interest rate and price level? Plot (a)-(d) on the IS-LM and AD-SRAS-LRAS diagrams. Make sure to label (i) the axes, (ii) the curves and (iii) the initial equilibrium levels. Is this a short-run level of output also a long-run equilibrium? Explain. Suppose that the government decreases taxes to T=10. Find the new short-run equilibrium levels of output and interest rate Find the long-run equilibrium levels of output, interest rates and prices. Graph this combination of policies…
18 - : If aggregate demand increases in an economy while aggregate demand is constant in the short run, which of the following statements is correct for the new equilibrium point?A) price decreases and national income increasesB) price rises national income risesC) price increases and national income does not changeD) price goes up and national income goes downE) price decreases and national income decreases.19 - : In which of the following expressions is the equation of change given correctly?A) MV=VK B) MT=PV C) MV=PT D) MP=VY E) MV=P