Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 10, Problem 11CQ
(a)
To determine
Illustrate the graph of the full employment in the aggregate
(b)
To determine
Illustrate the graph of an economic boom in the aggregate demand and supply model.
(c)
To determine
Illustrate the graph of a recession in the aggregate demand and supply model.
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Students have asked these similar questions
What is the relationship among the AD, SRAS and LRAS curves when the economy is in macroeconomic equilibrium?
Construct the AD, SRAS, and LRAS curves for an economy experiencing (a) full employment, (b) an economic boom, and (c) a recession. What will happen in each case if it's only temporary? What will happen in each case if it's permanent?
Using the AD/AS model, what would be an explanation for observing an increased price level and a decreased real GDP?
wages have increased.
the money supply has decreased.
productivity has increased.
the money supply has increased.
Chapter 10 Solutions
Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- what is meant by a recessionary gap and an inflationary gap in the AD/AS model.arrow_forwardBased on Aggregate Demand and Aggregate Supply Model, what is the effect on AD of each of the following events (will AD increase and shift to the right or decrease and shift to the left): A decrease in individual taxes. A decrease in government spending. An increase in interest rates.arrow_forwardQ33. Draw a basic AD and SRAS graph (with LRAS constant) that shows the economy in the long-run equilibrium. Suppose that the war between Ukraine and Russia sharply increased the price of petroleum, causing the unit cost per output in the economy to increase. ***If you have any trouble to draw a graph, you can answer the question without a graph. If then, your answer should include all the necessary steps, not just the final outcome. a. Using the AD-AS model, briefly analyze the short-run effects of the war on equilibrium real GDP and the price level, either with a AD-AS diagram or without a diagram. b. How does the economy adjust back to long-run equilibrium? Briefly explain (either with a AD-AS diagram or without a diagram).arrow_forward
- Construct the AD, SRAS, and LRAS curves for an economy experiencing 1. full employment 2. an economic boom, 3. a recession. What will happen in each case if it's only temporary? What will happen in each case if it's permanent?arrow_forwardExplain and illustrate graphically recessionary and inflationary gaps.arrow_forwardUsing the AD/AS model, what would be an explanation for observing an increased price level and a decreased real GDP? Group of answer choices wages have increased. productivity has increased. the money supply has increased. the money supply has decreased.arrow_forward
- Which of the following would NOT cause a shift in AD? Select one: a. A reduction in interest rates b. A fall in the cost of production c. A reduction in income tax d. An increase in government spendingarrow_forwardSuppose Mexico, one of our largest trading partners and purchaser of a large quantity of our exports, goes into a recession. Use the AD/AS model to determine the likely impact on our equilibrium GDP and price level.arrow_forwardWhich of the following would shift aggregate demand to the right? Choose all that apply. Group of answer choices Increasing imports. Increasing exports. Increasing taxes. Increasing consumer confidence.arrow_forward
- Use the AD-AS model diagram to address the effects of increasing government expenditure in the short-run and in the long-run equilibrium.arrow_forwardWhere does GDP fit into an AD/AS model?arrow_forwardHow to construct a Ad, SRAS and LRAS curve for economy with.. full employment Economic boom A recessionarrow_forward
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