The U.S. economy is at full employment when the world oil price falls. On an AS-AD graph, show the effect of the world oil price fall on the U.S. macroeconomic equilibrium in the short run. Explain the adjustment process that restores the economy to full employment. The graph shows the U.S. economy at a full-employment equilibrium. Draw a curve to show the effect of a fall in the world price of oil. Label it either AD, for a new AD curve or AS, for a new AS curve. Draw a point at the new short-run macroeconomic equilibrium. Along the adjustment path back to full employment with no change in monetary policy or fiscal policy, the money wage rate will and aggregate O A. fall; supply will increase O B. fall; demand will increase O C. rise; demand will decrease O D. rise; supply will decrease (

The U.S. economy is at full employment when the world oil price falls. On an AS-AD graph, show the effect of the world oil price fall on the U.S. macroeconomic equilibrium in the short run. Explain the adjustment process that restores the economy to full employment. The graph shows the U.S. economy at a full-employment equilibrium. Draw a curve to show the effect of a fall in the world price of oil. Label it either AD, for a new AD curve or AS, for a new AS curve. Draw a point at the new short-run macroeconomic equilibrium. Along the adjustment path back to full employment with no change in monetary policy or fiscal policy, the money wage rate will and aggregate O A. fall; supply will increase O B. fall; demand will increase O C. rise; demand will decrease O D. rise; supply will decrease (

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter20: Aggregate Demand And Supply

Section: Chapter Questions

Problem 3SQP

See similar textbooks

Similar questions

Suppose that in 2011, the price of cotton, an input good, decreases in Microtania. Show how this event will change equilibrium output and price level by shifting either the SRAS or AD curve, and then answer the questions below. Did equilibrium output increase or decrease?Increase/Decrease Did equilibrium price increase or decrease?Increase/Decrease
Which of the following is implied by a rightward shift in the economy's AS curve? There is a demand shock. The same output will be produced, but only at a higher price level. At any given price level, a higher level of output will be supplied. At any given price level, a lower level of output will be supplied.
For the following events, explain the short-run and long-run effects on output and the price level, assuming policymakers take no action. You need to draw the AD-SRAS-LRAS diagram for the Canadian economy, starting in a long-run equilibrium. Make sure to illustrate its effect using a well-labeled diagram . Assume that there is a large increase in demand for Canadian exports. Show the resulting short run equilibrium on your graph. In this short-run equilibrium, is the unemployment rate likely to be higher or lower than it was before the increase in exports? Explain it. Explain how the economy adjusts back to long-run equilibrium. When the economy has adjusted back to long-run equilibrium, how would the values of each of the following have changed relative to what they were before the increase in exports? a. Real GDP b. The price level (CPI) . c. The unemployment rate
The short-run quantity of output supplied by firms will exceed the natural level of output when the actual price level ———-that people expected.
Can someone help me graph the following explaination? Following the wage and price adjustments, the short run AS curve shifts rightward, moving the economy towards a new equilibrium (point C) where output returns to its potential level. The price level at point C will likely be lower than at point A, reflecting the adjustment in wages and prices. Now, let's illustrate the AS-AD diagram for point c, showing the short-run impact of these combined policy actions. The AS-AD diagram illustrates the short-run impact of the combined fiscal policy actions. Initially, the economy is at potential output at point A. The aggregate demand (AD) curve then shifts leftward due to the government spending cut and tax increase, moving the economy to a new short-run equilibrium at point B. This shift represents a decrease in real GDP and a potential change in the price level, indicating a slowdown in economic activity and possibly higher unemployment.
Which of the following causes the aggregate supply curve to shift inward? a. Increase in quantity of labor b. Increase in quantity of capital c. Decrease in GDP d. Decrease in price level
If households decide to save a larger portion of their income, what effect would this have on the output, employment, and price level in the short run? What about the long run?
Because fluctuations in the world oil price make the U.S. short-run macroeconomic equilibrium fluctuate, someone suggests that the government should vary the tax rate on oil, lowering the tax when the world oil price rises and increasing the tax when the world oil price falls, to stabilize the oil price in the U.S. market. If this suggestion is implemented, when the world price of oil ______, aggregate supply would ______. A. changes; not change B. falls; increase C. rises; decrease D. falls; decrease E. rises; increase
Given the following circumstances, indicate whether or not the aggregate supply curve would shift and, if so, which way would it shift: The price of a barrel of oil doubles An advance in alternative energy technology significantly reduces its cost In order to maintain a relatively clean air quality, a carbon emissions tax is levied against firms with a carbon footprint As a result of fracking, the price of natural gas is significantly reduced Advances in technology increase the productivity of the American worker, on average, by 30%
Beginning in March 2013, federal government spending was resstrained due to the sequester (feel free to Google details). Moreover, then President Obama’s budget proposals called for cuts in various types of government spending over the next ten years. Use the AD-AS model (along with a labor market graph) to show and explain how this will affect Y, N, W/P, and P over time. As an aside, recent news reports have suggested that the possibility of a renewed use of the sequester is part of the current political maneuvering over the federal budget for the fiscal year that starts October 1st.
A technological improvement raises productivity. On the following graph indicate the short run and long run effects of this change on the economy, assuming policymakers take no action. In the short run, the price level blanks and output blank. In the long run, the price level will be blank and output will be blank compared to the initial equilibrium prior to the change
When households cut back on their spending, then in the short run we tend to see the price level ______ and equilibrium output __________. fall; fall rise; fall rise; rise fall; rise