The following graph shows a hypothetical economy in long-run equilibrium at an expected price level of 120 and a natural output level of $600 billion. Suppose the government increases spending on building and repairing highways, bridges, and ports. Along the transition from the short run to the long run, priclevel expectations willand thecurvewill shift to theUsing the graph, illustrate the long-run impact of the increasin government spending by shifting both the aggregate dem(AD) curve and the short-run aggregate supply (AS) curve inappropriate directions.PRICE LEVEL240200160120804000200400600800OUTPUT (Billions of dollars)ASAD10001200| 2 | 2(?In the long run, due to the increase in government spendingthe price levelthethe quantity of output}natural level of output, and the unemployment ratenatural rate. Using the graph, shift the short-run aggregate supply (AS) cuor the aggregate demand (AD) curve to show the short-run impact of the increase in government spending.(?)AS160XAD4006008001000OUTPUT (Billions of dollars)PRICE LEVEL240200804002001200фефеASthe price levetheIn the short run, the increase in government spending oninfrastructure causes the price level topeople expected and the quantity of output tonatural level of output. The increase in government spendiwill cause the unemployment rate tounemployment in the short run.the natural rateAgain, the following graph shows a hypothetical economyexperiencing long-run equilibrium at the expected price levof 120 and natural output level of $600 billion, prior to theincrease in government spending on infrastructure.Along the transition from the short run to the long run, priclevel expectations willand thecurvewill shift to the

AD(aggregate demand) is the sum of C(consumption), I(investment ), G(government spending) and net…

Using the graph, shift the short-run aggregate supply (AS) c or the aggregate demand (AD) curve to show the short- run impact of the increase in government spending. PRICE LEVEL 240 200 160 80 40 0 200 400 600 800 OUTPUT (Billions of dollars) AS AD 1000 1200 AD AS In the short run, the increase in government spending on infrastructure causes the price level to the price leve the people expected and the quantity of output to natural level of output. The increase in government spendi will cause the unemployment rate to unemployment in the short run. the natural rate Again, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price lev of 120 and natural output level of $600 billion, prior to the

Using the graph, shift the short-run aggregate supply (AS) c or the aggregate demand (AD) curve to show the short- run impact of the increase in government spending. PRICE LEVEL 240 200 160 80 40 0 200 400 600 800 OUTPUT (Billions of dollars) AS AD 1000 1200 AD AS In the short run, the increase in government spending on infrastructure causes the price level to the price leve the people expected and the quantity of output to natural level of output. The increase in government spendi will cause the unemployment rate to unemployment in the short run. the natural rate Again, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price lev of 120 and natural output level of $600 billion, prior to the

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter26: The Neoclassical Perspective

Section: Chapter Questions

Problem 21P: Use Table 26.3 to answer the following questions. Sketch an aggregate supply and aggregate demand...

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Use Table 26.3 to answer the following questions. Sketch an aggregate supply and aggregate demand diagram. What is the equilibrium output and price level? If aggregate demand shifts right, what is equilibrium output? If aggregate demand shifts left, what is equilibrium output? In this scenario, would you suggest using aggregate demand to alter the level of output or to control any inflationary increases in the price level?
Given the Aggregate demand function of US AD= 5000 + 0.7Yd. Interpret this equation and diagramatically express the equilibrium output.
onsider the economy described by the following equations: C = 1,600 + 0.9 (Y – T) I p = 800 G = 1,600 NX = 200 T = 1,600 Y* = 29,000 a. Complete the table shown below to find short-run equilibrium output. Consider possible values for short-run equilibrium output as they are given in the table below.Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. OutputY Planned aggregate expenditure (PAE) Y – PAE Y = PAE? 27,200 (Click to select) Yes No 27,400 (Click to select) No Yes 27,600 (Click to select) No Yes 27,800 (Click to select) No Yes 28,000 (Click to select) No Yes b. Short-run level of equilibrium output: c. What is the output gap for this economy? Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. The actual unemployment rate should…
Know key terms: Explain in your own words (not google) the following:-LRAS-Aggregate Demand-Aggregate Demand Curve
Explain why the following statements are false.a. “The aggregate-demand curve slopes downwardbecause it is the horizontal sum of the demandcurves for individual goods.”b. “The long-run aggregate-supply curve is verticalbecause economic forces do not affect long-runaggregate supply.”
In 2006, the economy of Singsville had an aggregate demand and aggregate supply according to the following schedule:Price level Aggregate Demand Short-Run Aggregate Supply100 $1445 $1085110 $1380 $1140120 $1315 $1195130 $1250 $1250140 $1185 $1305150 $1120 $1360160 $1055 $1415 What was the equilibrium price level in Singsville in 2006?
A change in which of the following would shift theshort-run aggregate-supply curve but not the longrun aggregate-supply curve?a. the labor forceb. the capital stockc. the state of technologyd. the expected price level
Graph Initial Aggregate Demand/Short Run Aggregate Supply/Long Run Aggregate Supply and the shifts resulting from the scenario Please answer correct explain plz Don't answer by pen paper plz
The graphs illustrate an initial equilibrium for the economy. Suppose that the government increases spending. Use the graphs to show the new positions of aggregate demand (AD), short‑run aggregate supply (SRAS), and long‑run aggregate supply (LRAS) in both the short run and the long run, as well as the short‑run and long‑run equilibriums resulting from this change. Then, indicate what happens to the price level and real GDP (or aggregate output) in the short run and in the long run. Adjust the graph. explain the second image as well and which is right.
suppose that at a price index of 154 the quantity demand of u.s. real GDP is 10.0 trillion worth of goods. do these data represent aggregate demand or point on an aggregate demand curve? explain your answer?
Create a graph for a short-run aggregate supply curve. Use the variable ‘Price Level’ for the vertical axis and ‘Real GDP’ for the horizontal axis In your answer, explain why there is a direct relationship between the price level and real GDP. Use your graph to illustrate your explanation. Also, discuss determinants of Aggregate Supply or factors that shift Aggregate Supply curve. (200 to 300 words) .
Question 01 Due to COVID-19 situations the oil prices fall in international market. Let’s assume that output starts at its natural level. What happens to the country A's economy (output and price) in the short run? Explain your answer using AS-AD graphs.