Starting with a short run and long run equilibrium, assume a war breaks out, then," a.government spending increases b.household consumption increases c.long run aggregate supply shifts rightward d.short run aggregate supply shifts rightward.

Starting with a short run and long run equilibrium, assume a war breaks out, then," a.government spending increases b.household consumption increases c.long run aggregate supply shifts rightward d.short run aggregate supply shifts rightward.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter14: Money And The Economy

Section: Chapter Questions

Problem 9QP

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Question

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Starting with a short run and long run equilibrium, assume a war breaks out, then,"

a.government spending increases

b.household consumption increases

c.long run aggregate supply shifts rightward

d.short run aggregate supply shifts rightward.

Definition Definition Total supply of goods and services in an economy at a certain price level in a specific time period.

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Draw lines for the long-run aggregate supply curve. Explain its shape and what can cause it to move in a few sentences. b. Now add in the short run aggregate supply curve. What explains its shape and what can cause it to move? c. On a new diagram, draw the aggregate demand curve. Explain its shape and what can cause it to shift. d. Why do we have short- and long-run supply curves but only one (ie not short or long-run) demand curve?
The graphs illustrate an initial equilibrium for the economy. Suppose that the government increases spending. Use the graphs to show the new positions of aggregate demand (AD), short‑run aggregate supply (SRAS), and long‑run aggregate supply (LRAS) in both the short run and the long run, as well as the short‑run and long‑run equilibriums resulting from this change. Then, indicate what happens to the price level and real GDP (or aggregate output) in the short run and in the long run. Adjust the graph. explain the second image as well and which is right.
4) Draw a graph that plots Short-run Aggregate Supply, Long.Run Aggregate Supply, and Aggregate Demand. Indicate the equilibrium point on the graph. Then, explain the shifts of the curves and the movement of equilibrium under the following events. 1. Government increases the income taxes 2. The war in Libya increases the price of oil globally 3. The lack of raw materials causing shortage of electronic chips used in many consumer electronics 4. New economic policy that attracts more investment Draw a new graph for each of these policy analysis. Show the movements of curves clearly. Explain the short run and the long run impact of each policy with a few sentences.
c. If aggregate demand shifts right, what is equilibrium output? d. if aggregate demand shifts left, what is equilibrium output?
Aggregate demand is more likely to than aggregate supplyl in the short run a- bigger leakages b-national income c-domestic investment d- shift substantually