Which of the following is an example of a demand shock? O a change in the unemployment rate O a change in consumer confidence O a change in the growth rate of potential GDP O a change in the inflation rate
Q: Specific subject - Macroeconomic Analyse the case of a negative supply shock caused by an increase…
A: The aggregate supply curve increases such that the price level falls and output rises into an…
Q: The curve that is sometimes called the "long-run aggregate supply curve" (vertical Y*) relates the…
A: The aggregate supply is the total amount of services and commodities that firms in an economic plan…
Q: Time left 2:29:02 Which of the following provides the best explanation for the following: An economy…
A: Inflation is the rate at which the cost of goods and services increases in the economy. Finally, it…
Q: Refer to the diagram that shows an AD/AS model for a hypothetical economy. The economy begins in…
A: Aggregate supply shows a positive relationship between price level and real GDP. It slopes upward.
Q: The long-run aggregate supply curve is Select one: O a.a vertical line through the non-inflationary…
A: The long-run aggregate supply curve demonstrates that the change in aggregate demand would not make…
Q: A leftward shift in the aggregate supply curve is also referred to as: O a favorable shift O an…
A: The economics as a study is based upon the idea that the resources which are available with the…
Q: If the economy depicted below decides that unemployment is too great and is at point L, the monetary…
A: In the given graph, aggregate supply curve is given with three aggregate demand curves of an…
Q: Which of the following factor is not a lead to aggregate demand increase? O a. Decrease in loan…
A: Aggregate demand shows combinations of price and quantity of output demanded. It is composed of…
Q: An increase in costs will: Select one: O a. Reduce the natural rate of unemployment O b. Shift…
A: Cost: It refers to the price or the monetary value which has been used by the company so that the…
Q: Shipping costs have increased dramatically in the past few months. This is a and tends to O negative…
A: The answer is Option 1 - negative supply shock, increases price Therefore, Shipping costs have…
Q: Assume the economy is initially operating at the natural level of output. Which of the following…
A: The natural level of production of a system exists if all materials obtainable are used effectively.
Q: All of the following, except one, will cause an increase in aggregate demand. Which is the…
A: Aggregate demand is the sum of consumption, investment, government spending and net exports.
Q: The figure below shows the short-run aggregate demand and supply curves of an economy. In this…
A: NOTE: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: Which of the following would cause the short-run aggregate supply curve to shift to the right? O A.…
A: "In the short-run aggregate supply curve is upward sloping and reflect the total quantity of output…
Q: What happens to aggregate demand (AD) if the price level rises? O a) The quantity of AD increases. O…
A: Aggregate demand refers demand of all the goods and services by the consumers in the society at…
Q: If long-range aggregate supply (LRAS) shifts right, we know for certain that there has been a) an…
A: Long-range aggregate supply curve is vertical at full employment
Q: Which of the following could cause the aggregate demand curve to shift righ a) an increase in the…
A: Aggregate demand shows an inverse relationship between price level and the total output of goods and…
Q: The slope and position of the long-run aggregate supply curve Suppose the Fed doubles the…
A: The Fed doubles the growth rate of quantity of money in the economy which means that there is an…
Q: One of the most important views expressed by classical macroeconomists was that O A. supply creates…
A: Macroeconomists are the people who study the economy at an aggregate level.
Q: An impact lag happens because O a) it takes time for the effects of monetary and fiscal policy to…
A: Since one or more regulatory bodies in most countries must authorize government spending or new tax…
Q: When decision-makers have time to fully adjust to changes in the overall price level, we refer to…
A: In Economics, Long-run and Short-run are the concepts related to the market where the equilibrimity…
Q: (S Provide an IS Curve? example of a negative aggregate demand shock. How is this represented in the
A: Aggregate demand is the total value of goods and services produced in an economy at given prices and…
Q: The decrease in aggregate demand during the Great Depression was caused, in part, by O a) higher…
A: The Great depression is regarded as one of the most harsh recession in the world economic history.…
Q: Refer to the diagram that shows an ADIAS model for a hypothetical economy. The economy begins in…
A:
Q: Illustrate and interpretthe short-run and longrun effects of temporary and permanentsupply shocks
A: Aggregate supply curve will be affected when there is supply shock or negative supply shock. Supply…
Q: If policy makers think the natural rate of unemployment is lower than it really is, then their…
A: If policy makers think the natural rate of unemployment is lower than it really is, then their…
Q: Which of the following can cause a shift in the aggregate demand curve? O a) changes in the price…
A: Aggregate demand shows a negative relationship between price level and total output.
Q: Suppose the evening news anchor announces that "The Bank of Canada Raises the Target Overnight Rate…
A: Target overnight rate is the interest rate at which banks borrow and lend from one another in the…
Q: Prie ee AD AD Heal GDP FIGURE 23-4 Refer to Figure 23-4. Suppose the Canadian economy is initially…
A: Answer -
Q: Which of the following is true of a recessionary gap? O a. In the long run, this gap closes when the…
A: When talking about recessionary gap, it is the situation when an economy is experiencing relatively…
Q: In the AD-AS model, what will be the effect on the home country of an influx of migrant workers from…
A: The economies around the globe are involved in various economic, and financial activities. The…
Q: According to the dynamic AD-AS model, what is the most common cause of inflation? O A. Total…
A: Dynamic AD-AS model presents a dynamic short-run theory of output, inflation, and interest rates.
Q: Price level (GDP price Index 2012-100) Pocential AS 130 GDP 120 110 100 90 AD 19.0 195 20.0 20.5…
A: Current level of equilibrium is reached at the intersection of AD and AS. Long run equilibrium is…
Q: Given the data and policy, what happens in the AD/AS model? Select one: O A. Aggregate Demand (AD)…
A: In an economy the changes in governement spending as a direct and significant impact on the overall…
Q: In macroeconomic analysis, the assumption that potential output (Y*) is changing is a characteristic…
A: Potential GDP refers to the level that maximizes output with utilizing all the given resources and…
Q: Which of the following will most likely cause a change in the natural rate of unemployment?…
A: Unemployment arises when workers who wish to work are unable to do so, resulting in a reduction in…
Q: Which of the following shocks would plausibly shift the quantity of automobiles supplied curve to…
A: As per the law of supply, price has a direct relationship with quantity supplied.
Q: B. Can policymakers use monetary policy (and/or fiscal policy) to accommodate this shock? Describe…
A: The covid-19 is a pandemic that has been spread throughout the world taking the lives of almost a…
Q: Which one of the following events would be represented graphically as a decrease (inward shift) in…
A: Aggregate supply is the total supply of goods and services produced within an economy at a given…
Q: n Spring 2020, the U.S. economy once again found itself in an economic crisis, this time due to the…
A: US Government should follow the Keynesian approach. It is because covid 19 has created the situation…
Q: If consumers become pessimistic, the economy is likely to experience a O a. positive demand shock. O…
A: Demand/supply shocks take place on a temporary basis when there is a sudden, unprecedented change in…
Q: We expect a low unemployment rate to lead to inflation, since__ ---- O a) lower, wages tend to…
A: Unemployment: It refers to the people who are searching for a job in an economy. If more people in…
Q: Which of the following shifts in aggregate demand and short-run aggregate supply would cause an…
A: The measure that depicts a general rise in the level of prices of goods and services in an economy…
Q: A technological advance leads to a shift in O a) both SRAS and LRAS. O b) only aggregate demand…
A: A technology advancement leads to a shift in Correct Answer: Option (a) both SRAS and LRAS This is…
Q: What happens in the economy when firms are no longer áblé to meet the demand f1ör their Butput Draw…
A: The following problem has been solved as follows:
Q: : Which of the following statements is true if there is an increase in aggregate demand while the…
A: Meaning of Aggregate Demand and Aggregate Supply: The term aggregate demand refers to the…
Q: Which of the following will cause a movement along the short run aggregate supply curve? O A change…
A: "Supply is the quantity of goods that a producer is willing to sell at various prices over a given…
Q: In order to shift the vertical aggregate supply curve to the left, which of the following would have…
A: The long-run aggregate supply (LRAS) curve depicts the real output level (or the potential level of…
Q: The figure below shows equilibrium in an aggregate demand-aggregate supply model. In this figure,…
A: Answer: d ( the actual price level is lower than expected) Explanation: If the actual price level is…
Step by step
Solved in 3 steps
- Would you expect to see long-run data trace out a stable downward-sloping Phillips curve?The short run aggregate supply curve was constructed assuming that as the price of outputs increases, the puce of inputs stays the same. How would an increase in the prices of important inputs, like energy, affect aggregate supply?Unemployment rates have been higher in many European countries in recent decades than in the United States. Is the main reason for this long-term difference in unemployment rates more likely to be cyclical unemployment or the natural rate of unemployment? Explain briefly.
- Two main macroeconomic concerns are the problems of inflation andunemployment.a. What are the social costs of inflation? Explain TWO of them? b. What is natural rate of unemployment? Explain the TWO main causesof natural rate of unemployment. With reference specifically to ONEof these causes, suggest ONE practical government policy that reducesthe natural rate of unemployment.Illustrate and interpretthe short-run and longrun effects of temporary and permanentsupply shocksWhen there is a shockto the economy and GDP declines, how much of the decline is due to a changein potential output and how much to a change in short-run output?
- Please no written by hand solution Consider the following economic situations:C = $4.0 trillionI = $1.5 trillionG = $3.0 trillionT = $3.0 trillionNX = $1.0 trillionF = 0mpc = 0.8d = 0.35x = 0.15r = 1% λ = 0.5A. Calculate an expression for the IS, MP and AD curves ( r= ?, IS Y= ?, AD Y=?)B. Let AS curve be given by the relation: π = 6 + 1.5 (Y - 25.5) (i.e. the price shock is zero). What are the equilibrium values of inflation, output and the real interest rate(π, Y, r)?C. Suppose government purchases are raised from $3.0 trillion to $3.5 trillion. What are new short-run equilibrium inflation values, output and the real interest rate (π, Y, r}?D. Suppose a financial crisis begins, and ƒ increases ƒ = 3. (Assume government purchases are again as in part (a). What are the new short-run equilibrium values of inflation, output, and the interest rate (π, Y, r}?(Please solve all the parts with numerical steps so it could be practiced easily)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. GraphThe imaginary country of Harris Island has theaggregate supply and aggregate demand curves as Table24.3 shows. a. Plot the AD/AS diagram. Identify theequilibrium.b. Would you expect unemployment in thiseconomy to be relatively high or low?c. Would you expect concern about inflation in thiseconomy to be relatively high or low?d. Imagine that consumers begin to lose confidenceabout the state of the economy, and so ADbecomes lower by 275 at every price level.Identify the new aggregate equilibrium.e. How will the shift in AD affect the originaloutput, price level, and employment?
- According to adaptive expectations, what happensto the inflation rate and the unemploymentrate in the following situations?a. Initially, the economy is operating at thenatural rate of 6 percent unemployment.The anticipated rate of inflation is6 percent, and the actual rate is also6 percent.b. In the next period, there is an unexpected risein the inflation rate to 10 percent.c. In the next period, there is an unexpected risein the inflation rate to 12 percent.4Consider a baseline long run equilibrium where output is 22 trillion dollars, and the price level is 100. Note: In the Long Run Steady State Equilibrium, Price expectation is the same as price level & unemployment is 5% or lower. None of these are guaranteed in the short run. Usually, short run equilibrium is called an underemployment equilibrium.Starting from the baseline, suppose COVID 19 hits this economy. If this disease only makes workers sick (everything else remaining constant) A Keynesian Macroeconomist proposes the use of a massive expansionary fiscal policy. Step 1) What will be the shape of the Phillips Curve (Upward / Downward/ Vertical/Horizontal). I want you to think about what variable is measured on the horizontal axis of the Phillips Curve Graph and what variable is measured in the Phillips Curve Vertical axis. Then tell us what it means to say that Phillips Curve is upward or downward sloping or vertical or horizontal Step 2) why did this policy create a…Suppose, initially the Australian economy is atfull employment(in other words the economy is atthe potentialGDP). Using AD-AS model, explain how would each of the following events aectthe economy both in theimmediate and in the long term.a) A slowdown in China’s economic growth due to the sub-prime crisis in the US.b) Union wage settlements push the wage rate up.c) An increase in consumer confidence.
