Using the model of AD and AS, what happens to real GDP, the price level, and unemployment in the short-run with more consumption spending (C)? Real GDP decreases, Price level increases, Unemployment increases. В Real GDP increases, Price level increases, Unemployment decreases. Real GDP decreases, Price level decreases, Unemployment decreases. Real GDP increases, Price level decreases, Unemployment decreases.

Using the model of AD and AS, what happens to real GDP, the price level, and unemployment in the short-run with more consumption spending (C)? Real GDP decreases, Price level increases, Unemployment increases. В Real GDP increases, Price level increases, Unemployment decreases. Real GDP decreases, Price level decreases, Unemployment decreases. Real GDP increases, Price level decreases, Unemployment decreases.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter15: Poverty And Economic Inequality

Section: Chapter Questions

Problem 35CTQ: Think about the business cycle: during a recession, unemployment increases; it decreases in an...

See similar textbooks

Similar questions

Attached: figure 1: Hayek’s (Classical) AD-AS Model Question 1 Why does Hayek’s aggregate supply curve always lead to an equilibrium level of national output equal to the full-employment level of real GDP? Question 2 Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayek’s idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce? Question 3 Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes (shifts) in AS realistically? Why or why not?
3. a) Using AD-AS model, explain how a negative demand shock due to COVID 19 will affect the economy in the short run and long run (Show short run and long run adjustment in a single diagram).
Question: The attached picture shows the aggregate demand/aggregate supply situation in the U.S. What is the value of actual GDP? What is the value of the GDP deflator? Assume that people and businesses become pessimistic about the future of the economy; how will this affect the graph above in the short run? (i.e., which curve(s) will shift, and in which direction?) After the short-run event in part b, what will happen to actual GDP? What will happen to the price level? After the short-run event in part b, describe how the economy is doing in terms of the business cycle (i.e., recession, full employment, expansion). What long-run adjustments will be made in this economy as a result of the short-run changes in part c? How will the curve(s) shift in response to these long-run adjustments? After the long-run adjustments in part e, describe how the economy is doing in terms of the business cycle (i.e., recession, full employment, expansion).
2. An introduction to the AD-AS model The aggregate demand and aggregate supply model is a useful simplification of the macroeconomy used to explain short-run fluctuations in economic activity around its long-run trend. The vertical axis of a diagram of the aggregate demand and aggregate supply curves measures which of the following? An economy’s price level The amount of a particular representative good produced in the economy The price of a particular representative good produced in the economy Which of the following are reasons that the short-run aggregate supply curve slopes upward? Check all that apply. As the price level rises, firms expand their production because they can sell their output for more money. As the price level rises, firms find it more profitable to hire workers at any given wage. As the price level rises, firms decrease their investment because it is more expensive to purchase capital.
09. The left-hand Which of the following statements is tru about the diagrams above depicting the macroeconommy in both Keynesian and Classical frameworks and a change from AEo to AE* and ADo to AD*? a) The left-hand diagrams show the effect of an increase in Aggregare Expenditures (and Aggregate Demand), where the short-run Aggregate Supply is horizontal, meaning a constant products price level. b) The right hand diagrams show the effect of an increase in Aggregate Expenditrues (and Aggregate DEmand), where short-run Aggregate Supply is vertical (constant Aggregate Quantity Supplied). c) The left-hand diagrams illustrate the Keynesian range of the shor-run Aggregate Supply curve, where Keynesian expansionary policy does not cause any inflation and thus is very effective. d) The right-hand diagrams illustrate the Classical or Monetarist range of the short-run Aggregate Supply curve, where Keynesian expansionary policy is totally dissipated in…
magine an economy in which nominal GDP grew between 2018 and 2019 and real GDP fell during that same time period. Which of the following answers might explain this? Question 30 options: A) both prices and national output increased between 2018 and 2019 B) both prices and national output fell between 2018 and 2019 C) prices in the economy increased while national output fell between 2018 and 2019 D) prices in the economy fell while national output increased between 2018 and 2019
Specific subject - Macroeconomic Analyse the case of a negative supply shock caused by an increase in oil prices and compare with the shock caused by the Covid pandemic. What would be the similarities and differences between the two shocks? What would be the effect of an expansionary economic policy (increase in aggregate demand)? Graph What measures or government intervention would be most appropriate to deal with both types of shocks? Graph Compare the adjustment in both cases with and without government intervention. Graph
Macroeconomics question: In an economy, the government wants to increase aggregate demand by $50 billion at each price level to increase real GDP and reduce unemployment. If the MPS is 0.4, then it could increase government spending by: A. $20 billionB. $10 billionC. $40.50 billionD. $31.25 billion
Economics a) Discuss the determinants of aggregate consumption and aggregate investment. Base onhistorical Australian data, which tends to fluctuate more – investment or consumption? You must also answer why it does this, Data must be sourced. (500 Word count) b) Suppose bad economic stats led investors to be more negative about futureprospects on earnings on investment projects. With the help of diagrams, review theimpact of this change on aggregate consumption and income. Word limit 600
Discuss how the AD/AS model can explain economic growth, recessions, as well as changes in unemployment and inflationary pressures. (11.5)
5. Suppose an economy is hit by a flood and its natural resources decreases. a) Show graphically using AD-AS model how the price level and output are affected in the short-run. b) Can the government use monetary policy to offset the effects on price level and output, explain?
No written by hand solution An economist needs to predict the real wage rate, employment, output, real interest rate, consumption, investment, and price level. The economy is hit with a shock, which the economist thinks is a temporary adverse supply shock. (a) If you were the economist, what would be your forecasts for each of the variables listed above (rise, fall, and no change) in general equilibrium? (b) What if the shock was due to people's reduced expectations about their future income? Which variables did you forecast correctly, and which did you forecast incorrectly in part (a)?