Answer choices for part 1 blanks:Blank 1: shortage, surplusBlank 2: falls, remains the same, risesBlank 3: decrease, do not change, increaseBlank 4: decrease, do not change, increaseThere is one last part to this question that did not fit in the picture:Suppose the economy experiences domestic goods become relatively less expensive than foreign goods. Adjust the graph to show the effect of domestic goods become relatively less expensive than foreign goods on the economy.Which of the following best describes the effect of domestic goods become relatively less expensive than foreign goods?a.) The price level rises back to PE, and Real GDP increases from $30 trillion to $35 trillion. b.) The price level rises even higher above PE, and Real GDP increases from $30 trillion to $35 trillion. c.) The price level falls even further below PE, and Real GDP decreases from $30 trillion to $35 trillion. d.) The price level falls but remains above PE and Real GDP decreases further from $30 trillion to $35 trillion. The following graph shows an aggregate demand (AD) curve and a short-run aggregate supply (SRAS) curve for an economy. Suppose that theeconomy is initially in a short-run equilibrium: at Pg, and Real GDP is 25 trillion.Suppose that at some point, the price increases to P*.PRICE LEVEL'am0 5 10At P*, there isSRASof $output, and consumersAD1520 25 30 35 40REAL GDP (Trillion Dollars)14550trillion goods. As a result, the price levelconsumption.?"firms The following graph shows an aggregate demand (AD) curve and a short-run aggregate supply (SRAS) curve for an economy. Suppose theeconomy is initially in a short-run equilibrium at Pg, and Real GDP is 25trillion.At some point, the economy experiences a decrease in wage rates.Adjust the following graph to show the effect of a decrease in wage rates on the economy.?Price Levelmu+0 510+15 20 25 30 35Real GDP (Trillions Dollars)SRASAD4045 50AD0SRASWhich of the following best describes the effect of a decrease in wage rates?O The price level rises above Pg, and the Real GDP decreases to $30 trillion.O The price level falls below Pg, and the Real GDP increases to $30 trillion.O The price level remains the same, but the Real GDP decreases to $30 trillion.The price level falls below PE, but the Real GDP remains the same.

Given, An Aggregate Demand curve (AD) and Short Run aggregate supply (SRAS) curveThe economy is…

Answered: The following graph shows an aggregate…

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter33: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 4CQQ

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Answer choices for part 1 blanks:

Blank 1: shortage, surplus

Blank 2: falls, remains the same, rises

Blank 3: decrease, do not change, increase

Blank 4: decrease, do not change, increase

There is one last part to this question that did not fit in the picture:

Suppose the economy experiences domestic goods become relatively less expensive than foreign goods. Adjust the graph to show the effect of domestic goods become relatively less expensive than foreign goods on the economy.

Which of the following best describes the effect of domestic goods become relatively less expensive than foreign goods?

a.) The price level rises back to PE, and Real GDP increases from $30 trillion to $35 trillion.

b.) The price level rises even higher above PE, and Real GDP increases from $30 trillion to $35 trillion.

c.) The price level falls even further below PE, and Real GDP decreases from $30 trillion to $35 trillion.

d.) The price level falls but remains above PE and Real GDP decreases further from $30 trillion to $35 trillion.

The following graph shows an aggregate demand (AD) curve and a short-run aggregate supply (SRAS) curve for an economy. Suppose that the
economy is initially in a short-run equilibrium: at Pg, and Real GDP is 25 trillion.
Suppose that at some point, the price increases to P*.
PRICE LEVEL
'a
m
0 5 10
At P*, there is
SRAS
of $
output, and consumers
AD
15
20 25 30 35 40
REAL GDP (Trillion Dollars)
145
50
trillion goods. As a result, the price level
consumption.
?
"
firms

The following graph shows an aggregate demand (AD) curve and a short-run aggregate supply (SRAS) curve for an economy. Suppose the
economy is initially in a short-run equilibrium at Pg, and Real GDP is 25trillion.
At some point, the economy experiences a decrease in wage rates.
Adjust the following graph to show the effect of a decrease in wage rates on the economy.
?
Price Level
mu
+
0 5
10
+
15 20 25 30 35
Real GDP (Trillions Dollars)
SRAS
AD
40
45 50
AD
0
SRAS
Which of the following best describes the effect of a decrease in wage rates?
O The price level rises above Pg, and the Real GDP decreases to $30 trillion.
O The price level falls below Pg, and the Real GDP increases to $30 trillion.
O The price level remains the same, but the Real GDP decreases to $30 trillion.
The price level falls below PE, but the Real GDP remains the same.

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