Suppose an economy experiences a positive supply shock. What is the short-run effect on output and the price level? Group of answer choices Output rises and the price level falls. Output and the price level both rise. Output falls and the price level rises. Output and the price level both fall.
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Suppose an economy experiences a positive supply shock. What is the short-run effect on output and the
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- If aggregate demand shifts left, then in the short run a. the price level and real GDP both rise. b. the price and real GDP both fall. c. the price level falls and real GDP rises. d. the price level rises and real GDP falls.In 2006, the economy of Aptonville had an aggregate demand and aggregate supply according to the following schedule: Price Level Aggragate Demand Shortrun Aggragate Supply 90 $1325 $1085 100 $1300 $1140 110 $1275 $1195 120 $1250 $1250 130 $1225 $1305 140 $1200 $1360 150 $1175 $1415 What was Aptonville’s short-run equilibrium output in 2006?If policymakers decrease aggregate demand, then in the short run the price level Answer falls and unemployment rises. and unemployment fall. and unemployment rise. rises and unemployment falls.
- Consider a demand shock caused by a contraction in the quantity of money in the economy. Analyze the effect on the short-run equilibrium and the long-run equilibrium, with the price level and aggregate supply. Graph Analyze the effect on output, employment, and the natural rate of unemployment? Analyze short-run and long-run. Graph Analyze and compare adjustment effects with and without government intervention.Assume that aggregate demand is unaffected by the gas tax holiday. After the economy has fully adjusted to the gas tax holiday, the long-run effect is (an increase, no change, a decrease) in aggregate output and (an increase, no change, a decrease) in the price level.Suppose that firms become very pessimistic about future business conditions and cut heavily on investment in capital equipment. Show the long-run equilibrium of the economy. Explain what happens to Price level and Quantity of Output in the long run equilibrium. Explain in words why the aggregate quantity of output demanded changes between the short run and the long run. [No policy involvement]
- Suppose the price of a barrel of oil rose from US$100 to US$150. Use a basic aggregate demand and aggregate supply diagram to show the short-run effects on the Australian economy. Explain your answers. Use a basic aggregate demand and aggregate supply diagram to show the long-run effects on the Australian economy. Explain your answers.Assume that aggregate demand is unaffected by the oil price spike. After the economy has fully adjusted to the oil price spike, the long-run effect is (no change, an increase, a decrease) in aggregate output and (no change, an increase, a decrease) in the price level.Scientists invent a new low cost solar panel able to reduce the price of producing electricity by 50% Given this improvement in technology, what will happen to the price level and output, respectively, in the long run? Rise. Fall Uncertain, Fall Uncertain, Rise Rise, Rise Fall, Rise
- During the transition from the short run to the long run, price level expectations will (remain the same, increases, decreases), and the (aggregate demand, short-run aggregate supply) curve will shift to the (left, right). In the long run, as a result of the investment tax credit, the price level (remain the same, increases, decreases), the quantity of output (rises above, falls below, returns to) potential output, and the unemployment rate (rises above, falls below, returns to) the natural rate of unemployment.Consider a demand shock caused by a contraction in the quantity of money in the economy. Analyze the effect on the short-run equilibrium and the long-run equilibrium, with the price level and aggregate supply. Graph What happens to output, employment and the natural rate of unemployment? Compare short-run and long-run. Graph Compare adjustment with and without government intervention.Assuming a stable short-run supply curve, what will happen if there is a shift in aggregate demand? a) Profits and output increase in the long-run. b) Unemployment decreases in the long-run. c) Profits and output decrease in the short-run. d) Unemployment increases in the short-run. e) Unemployment and prices move in opposite directions in the short-run.