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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Chapter 10, Problem 13CQ
(a)
To determine
Illustrate the impact of an increase in the housing price on output and employment in a graph.
(b)
To determine
Illustrate the impact of a fall in the housing price on output and employment in a graph.
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Students have asked these similar questions
During 2007 and 2008, housing prices fell sharply.
Use the AD–AS model to illustrate the impact of these price declines on output and employment.
Evaluate the following statement.
The AD–AS model indicates that the decrease in housing prices increased wealth, stimulated aggregate demand, and generated an economic boom.
True
False
Oil prices have fallen quite substantially in recent weeks. Moreover, the deveopment of new sources of oil and natueral gas is taking place throughout the U.S. 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. Does the reduction in oil prices make the Fed’s job easier or harder? Explain.
Due to the severity of COVID 19 on households, the government of Australia announced Job Keeper Allowances to be given to the labour force that had lost employment.
(a). Examine the impact of Job Keeper Allowances during the COVID 19 recession on Australia's economy.
Chapter 10 Solutions
Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- How is the natural rate of unemployment Illustrated in an AD/AS model?arrow_forwardUnemployment can be caused by a decrease of aggregate demand OR a decrease of aggregate supply. Do you agree or disagree and why? In each case, specify the price-level outcomesarrow_forwardI need some help figuring out how to draw these graphs. Thank you Suppose the economy of Hawkland is initially at full employment. Currently real GDP is $20 trillion, the price level is 120, the money wage is $36/hour, the full employment quantity of labor is 300 billion hours per year, and the current unemployment rate is 6% Draw a fully labeled graph depicting the aggregate labor market in Hawkland.Be sure to label all axes and include numerical values for variables on the axeswhere relevant. Provide a brief explanation to the side and show any necessary calculations.Label any relevant curves with a zero subscript (ex: LS0) and use a zero in a circle to clearly label the initial equilibrium. Part 2- Draw a fully labeled graph depicting the aggregate goods and services market in Hawkland.Be sure to label all axes and include numerical values for variables on the axes where relevant. Provide a brief explanation to the side and show any necessary calculations.Label any relevant curves…arrow_forward
- During spring 2016 the Midwestern United States, which has a large agricultural base, experiences above-average rainfall. Using the AD/AS diagram, what is the effect on output, the price level, and employment?arrow_forwardReview the problem in the Work It Out titled Interpreting the AD/AS Model. Like the information provided in that feature, Table 24.2 shows information on aggregate supply, aggregate demand, and the price level for the imaginary country of Xurbia. Plot the AD/AS diagram from the data. Identify the equilibrium. Imagine that, as a result of a government tax cut, aggregate demand becomes higher by 50 at every price level. Identify the new equilibrium. How will the new equilibrium alter output? How will it alter the price level? What do you think will happen to employment?arrow_forwardSuppose the level of structural unemployment increases. How would you illustrate the increase in structural unemployment in the AD/AS model? Hint: How does structural unemployment affect potential GDP?arrow_forward
- If new government regulations require firms to use a cleaner technology that is also less efficient than what they previously used, what would the effect be on output, the price level, and employment using the AD/AS diagram?arrow_forwardHow is pressure for inflationary price increases shown in an AD/AS model?arrow_forwardSome politicians have suggested tying the minimum wage to the consumer price index (CPI). Using the AD/AS diagram, what effects would this policy most likely have on output, the price level, and employment?arrow_forward
- Economists expect that as the labor market continues to tighten going into the latter part of 2015 that workers should begin to expect wage increases in 2015 and 2016. Assuming this occurs and it was the only development in the labor market that year, how would this affect the AS curve? What if it was also accompanied by an increase in worker productivity?arrow_forwardThe imaginary country of Harris Island has the aggregate supply and aggregate demand curves as Table 24.3 shows. Plot the AD/AS diagram. Identify the equilibrium. Would you expect unemployment in this economy to be relatively high or low? Would you expect concern about inflation in this economy to be relatively high or low? Imagine that consumers begin to lose confidence about the state of the economy, and so AD becomes lower by 275 at every price level. Identify the new aggregate equilibrium. How will the shift in AD affect the original output, price level, and employment?arrow_forwardOil prices have fallen quite substantially since 2008. Moreover, the deveopment of new sources of oil and natueral gas is taking place throughout the U.S. 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. Also, explain how the decrease in oil/energy prices makes the Fed’s job somewhat easier.arrow_forward
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