Suppose a boom in stock market prices helps make people feel wealthier. Using the model of aggregate demand and aggregate supply, identify and illustrate the curves that are affected, and which direction these curves would shift. In your own words, explain what happens to price level and real GDP and equilibrium? (Hint: Graph your own AD/AS model to answer part of the question)

Q: If current output is Q1 and full-employment output is Q3, then in the long run the short aggregate…

A: The full-employment level of output is the economy output at its highest potential.  The current…

Q: Which of the following does the slope of the aggregate demand curve indicate? As the price level…

A: Aggregate demand refers to the overall demand for goods and services in an economy. Aggregate supply…

Q: The federal government buys $20 million worth of computers from Dell. If the MPC is 0.60, what will…

A: Given  MPC=0.60 Federal government buys $20 million worth of computers Therefore government…

Q: The aggregate demand curve slopes downward because when the price level is lower, people can afford…

A: The aggregate demand curve slope downwards as the price level and the aggregate demand has a…

Q: Question 5 A decrease in one of the components of real GDP, such as Exports will cause the AD curve…

A: In macroeconomics, economic fluctuations are generally studied using the concepts of aggregate…

Q: The following graph shows the short-run aggregate supply curve (AS), the aggregate demand curve…

A: If the bout of severe weather increases the agriculture cost, cost of transporting and cost of…

Q: Assume that an economy is initially operating at the natural rate of output (full employment…

A: "Macro-economic equilibrium is attained at a point where aggregate demand (AD) intersects aggregate…

Q: Which of the following would cause an increase in long-run aggregate supply? The price level…

A: AS(Aggregate supply) is the curve which shows the relationship between P(price level) and…

Q: Explain  the factors that cause the Aggregate Demand curve to be downward sloping left to right.

A: The meaning of downward sloping demand curve is that when the price falls the aggregate demand…

Q: Suppose that the price level is constant and that investment decreases sharply. How would you show…

A: As per the company policy we are only supposed to answer one question per session, sorry for…

Q: Suppose concerns about the size of the federal budget deficit lead the U.S. Congress to cut all…

A: As technology growth falls, production becomes less efficient. This leads producers to produce less,…

Q: Please explain why the long-run aggregate supply curve is vertical. What variable causes the…

A: Long run Aggregate supply curve important in finding the long run equilibrium of an economy.

Q: List any five factors that can shift the aggregate demand (AD) curve to the right.

A: Answer: Aggregate demand: aggregate demand refers to the total demand for domestic goods and…

Q: One of your classmates is convinced that the actual amount of output that corresponds to the…

A: The fixed LRAS corresponds to the the natural level of output, which the economy can produce at…

Q: What kind of change would happen to  aggregate demand, aggregate supply, and real GDP. if foreign…

A: Macroeconomics is important in policy making and understanding the growth of the GDP of the country.…

Q: What would happen to short- and long-run aggregate supply if unusually good weather led to bumper…

A: To determine the impacts on the short run aggregate supply and the long run aggregate supply if…

Q: A decrease in the price level will produce a movement between which of the following two points on…

A: Aggregate demand represent the total demand of goods and services produced in a economy at a given…

Q: Which would most likely increase aggregate supply?  An increase in the prices of imported products…

A: The aggregate supply curve is the total supply of goods and services in an economy that is willing…

Q: Aggregate demand and aggregate supply.  Aggregate demand and aggregate supply can be influenced by…

A: AD or aggregate demand is the sum of all the demands of finished goods in an economy. It depicts the…

Q: Which of the following will cause a decrease in aggregate demand? A) Increase in government…

A: Income taxes affect the consumption component of aggregate demand. a rise in income taxes reduces…

Q: Based on the figure, which of the following would cause the aggregate demand curve to shift from AD1…

A: Aggregate demand shows an inverse relationship between price level and real GDP. It is a downward…

Q: Which of the following policies should increase aggregate demand, short-run aggregate supply, and…

A: In an economy, governement has the ability to influence the market output by using economic…

Q: How would a dramatic increase in the value of the stock market shift the AD curve? What effect would…

A: An expansion in the value of the stock market would cause people to feel richer and in this way,…

Q: Which of the following policies does not shift the aggregate supply curve to the right?

A: (1) The aggregate supply (AS) curve depicts the total supply of goods and services at each price…

Q: Which of the following both shift aggregate demand left?   a decrease in taxes and at a given price…

A: The aggregate demand curve shows all the combinations of the quantity of real GDP demanded and the…

Q: The following graph shows an aggregate demand curve (AD) illustrating the inverse relationship…

A: The contradictory phase in economy a situation happens when there is deflation or fall in prices of…

Q: Use the AD/AS model to explain the likely short run impacts on US GDP and the aggregate price level.…

A:

Q: Illustrate each of the following situations with a graph showing the Short-run Aggregate Supply…

A: The aggregate supply is the summation of all the individual supply curves in the economy. The…

Q: The following graph shows the short-run aggregate supply curve (AS), the aggregate demand curve…

A: AD/AS model: The AD-AS framework demonstrates national income generation and price level…

Q: Use the following graph to answer the next question.     In the figure, AD1 and AS1 represent the…

A: It shows expansion because actual real GDP is greater than potential real GDP. When AD1 rises to…

Q: Tax cuts are more effective in generating the economy when the economy is in recession compared to…

A: The reduction in taxes that is being made by the government is known as a cut in taxes. This leads…

Q: Q.1 (B2. Shift of aggregate demand) For each of the following separate scenarios, discuss how it…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: A technological improvement raises productivity. On the following graph, indicate the short-run and…

A: in the short run, the price level increases output level increases because an increase in demand…

Q: Assume that an economy is initially operating at the natural rate of output(full employment output).…

A: The reduction in government spending reduces aggregate demand in the economy. This creates different…

Q: The horizontal axis of the aggregate demand and aggregate supply model measures the overall The…

A: Aggregate demand and aggregate supply curve shows the market equilibrium. The horizontal axis…

Q: The government of South Africa responded to the COVID 19 pandemic by implanting a number of…

A: The pandemic has slowed down the economy of the country. Resulting there is lower demand and high…

Q: The following graph shows the economy in long-run equilibrium at the expected price level of 120 and…

A: Aggregate demand refers to the expected amount received from the market from the sales proceedings…

Q: Which of the following would not shift the aggregate demand curve to the left? Group of answer…

A: The aggregate demand (AD) curve is a line exhibiting the relationship between total units demanded…