Suppose that the U.S. economy is at full employment when strong economic growth in Asia increases the demand for U.S.-produced goods and services. How the U.S. price level and real GDP will change in the short run?

Q: Indicate whether the descriptions that follow are short-run aggregate supply curves, long-run…

A: Short-run aggregate supply curve:- The amount of overall production that will be generated at each…

Q: Starting with a short run and long run equilibrium, assume a war breaks out, then," a.government…

A: Short-run equilibrium occurs at the intersection point of the short-run aggregate supply (SRAS) and…

Q: Which of the following would cause the aggregate price level to fall and the equilibrium level of…

A: Both aggregate demand and supply will cause the change in price level and real GDP in the short run.…

Q: True or false The aggregate supply curve is vertical in the long run at the full-employment level…

A: According to the given question Answer is TRUE

Q: If the government chooses not to intervene in the economy, what will happen to the above variables…

A: If the government chooses not to intervene in the economy, then the following will happen to the…

Q: Assume that the United States economy is currently in a recession in a short-run equilibrium. Draw…

A: When the economy is in recession, real GDP is less than potential GDP.

Q: m price level will fall, and the equilibrium level of GDP will fall.   B. Aggregate demand will…

A: 1. When consumers and businesses tend to have negative expectations about the future level of…

Q: Give an example of an event which causes the economy to go from point D to point B in the long run.

A: The above graph shows the short run and long run equilibrium of an economy.

Q: The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand…

A: The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand…

Q: Suppose an economy is at the short run equilibrium which its current output level called Y1, is…

A: The economy is at the short run equilibrium at income Y1 and the price level P1. At this point,…

Q: Which range of aggregate supply would represent an economy where prices are rising as output…

A: The aggregate supply of a country's economy is its output of goods and services. The four production…

Q: Q35 The positive relationship between short-run aggregate supply and the price level indicates…

A: Aggregate supply curve is related to price and output. As money wage rate increases, aggregate…

Q: Assume that the United States economy is currently in a recession in a short-run equilibrium. Draw…

A: Assuming the economy of  United States is currently in recession in a short run equilibrium.…

Q: Suppose a country's potential level of output is $90 billion. A decrease in total spending causes…

A: In the short run, output can differ from potential level of output as wages and prices are fully…

Q: The Canadian government increases its expenditure on goods and services in a time of war or…

A: The measure that depicts the final value of goods and services within an economy during a specified…

Q: The following events have occurred in the history of the United States:  A deep recession hits the…

A: Deep recession will decline the economic activities in an economy which put negative impact on…

Q: Suppose there is an international recession hits the US economy, what is the long-run equilibrium…

A: The explanation that at whatever point the economy enters a downturn, its long-run run aggregate…

Q: In the long run, the price level is determined by   a. the short-run aggregate supply curve and…

A: In the long run, the price level is determined by the short-run aggregate supply curve and the…

Q: In the short run, the decrease in consumption spending due to the increase in saving shifts the…

A: Aggregate demand (AD) is the sum total amount of commodities and services demanded in an economy at…

Q: Suppose the economy is self-regulating, the price level is 132, the quantity demanded of Real GDP is…

A: It can be said that the economy is in short-run equilibrium as the aggregate demand (AD) is equal to…

Q: Which of the following must be true in the long run? Production increases when prices increase. An…

A: In the long run, the price of the goods and the wages are flexible in the market, that is why the…

Q: why the short run aggregate supply curve has a positive slope and the long run supply curve a…

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

Q: Suppose the economy is self-regulating, the price level is 132, the quantity demanded of Real GDP is…

A: In the short run, aggregate demand is 4 trillion and aggregate supply is 3.9 trillion. Aggregate…

Q: Assume that the long-run aggregate supply curve is vertical at Y = 3.000 while the short-run…

A: Y=3000 Short run aggregate supply curve is horizontal at P= 1.0 Aggregate demand curve is; Y=2MP M=…

Q: In the following figure, an economy is currently in short-run equilibrium at point a. What is likely…

A: SRAS is used to mention short-term aggregate supply, and LRAS is used to mention long-term aggregate…

Q: For each of the scenarios, please decide whether there will be an increase or decrease in short-run…

A: 1a: Since there is a the cost of health insurance is increases, it leads to reduces the demand and…

Q: Now, show the long-run impact of the investment tax credit by shifting both the aggregate demand…

A: The AD-AS is a macroeconomic model that determines the national output and the general price level…

Q: Refer to the above graph. Which of the following statemen Copyrighted material - not to be shared.…

A: Given the short-run equilibrium price = 130 The equilibrium quantity = 8

Q: The following events have occurred in the history of the United States: A deep recession hits the…

A: If a deep recession hits the world economy then the demand for US exports will fall. As the exports…

Q: If the price level rises and the money wage rate  rises by the same percentage, what happens to the…

A: Answer: The quantity of real GDP will not change and there will be an upward movement along the…

Q: Suppose the people of Canada has reduced their spending on goods and services from the United…

A: When the people of Canada has reduced their spending on goods and services from the United States,…

Q: theory of macroeconomic fluctuations is also the short run model of the macroeconomy and assumes…

A: Microeconomics is a part of standard economical matters that concentrates on the way of behaving of…

Q: Which of the following are assumed to remain unchanged along a given short-run aggregate supply…

A: The aggregate supply curve depicts the quantity of real GDP that is supplied by the economy at…

Q: Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly…

A: If the government and the Federal Reserve take no policy action in response to the recession - The…

Q: Create a graph with an aggregate demand curve and an aggregate supply curve in the short-run. Use…

A: The aggregate demand curve is a negatively sloped curve, which expresses the relationship between…

Q: Find the attached file.

A: Gross domestic product refers to the total amount of all the goods, and services which are produced…

Q: Why does the short-run aggregate supply curve slope upward to the right? If the prices of both (a)…

A: Aggregate supply is the total amount of services and commodities that firms in an economic plan to…

Q: “Members of Congress are interested in increasing the minimum wage from its current rate of $7.25 an…

A: Low-skilled workers generally find it difficult to find a job. Their value is very less and they…

Q: If households decide to save a larger portion of their income, what effect would this have on the…

A: If the household decides to save a large proportion of their income then they will spend less on…

Q: During the transition from the short run to the long run, price level expectations will (remain the…

A: In the long run, when there is an decrease in consumption, it leads to increase in savings which…

Q: aggregate demand shifts left, then in the short run

A: AD curve represent total quantity of all goods demanded by economy at different price level.

Q: How would the long-run equilibrium output change if the price level fell?  Decrease, Increase or No…

A: The aggregate supply is the total amount of services and commodities that firms in an economic plan…

Q: Unlike the Suez Canal, the Panama Canal is highly relevant for the US economy. A blockage of the…

A: Real GDP: - it is the inflation-adjusted value of all final goods and services produced in any…

Q: Starting from long-run equilibrium, a large increase in government purchases will result in a output…

A: Expansionary gap is the gap between the real output and the potential output. It is the gap which…

Q: Assume that aggregate demand is unaffected by the gas tax holiday. After the economy has fully…

A: Due to the gas tax holiday, in the longrun, the aggregate demand curve will not be affected and a…

Q: Q1: Due to COVID-19 situations, the oil prices fall in the international market. Let’s assume that…

A: When oil prices fall temporarily then the input cost incurred by several businesses in the economy…