MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 10, Problem 8SQ
To determine
The impact of the pessimistic future expectations of the workers.
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How would each of the following factors shift the aggregate demand curve? a. an increase in expected future output.b. an increase in government purchases.c. an increase in taxes.
d. an increase in the future marginal product of capital. e. an increase in the nominal money supply.f. an increase in expected inflation.g. an increase in the risk of non-monetary assets
The business cycle occurs because
A. the government is constantly trying to produce an inflationary gap, but expenditures in the economy cannot keep pace with the government's agenda
B. aggregate demand and short-run aggregate supply fluctuate, but the money wage rate does not adjust quickly enough to keep real GDP at potential GDP
C. potential GDP is increasing, and increases in aggregate demand cannot keep pace with increases in long-run aggregate supply
D. the Bank of Canada is constantly increasing the quantity of money.
In the year 2000, the Chinese economy’s growth was not as fast as the government expected. The Chinese government prolonged the Labour Day vacation (in May) to 7 days so that people could spend more.
a. Explain this decision, using the model of aggregate demand and aggregate supply. (6%)
b. Why did the Chinese government not wait until the economy adjusted back to its expected long-run position of high economic growth? (2%)
Chapter 10 Solutions
MACROECONOMICS FOR TODAY
Ch. 10.7 - Prob. 1YTECh. 10.A - Prob. 1SQPCh. 10.A - Prob. 2SQPCh. 10.A - Prob. 3SQPCh. 10.A - Prob. 4SQPCh. 10.A - Prob. 5SQPCh. 10.A - Prob. 6SQPCh. 10.A - Prob. 1SQCh. 10.A - Prob. 2SQCh. 10.A - Prob. 3SQ
Ch. 10.A - Prob. 4SQCh. 10.A - Prob. 5SQCh. 10.A - Prob. 6SQCh. 10.A - Prob. 7SQCh. 10.A - Prob. 8SQCh. 10.A - Prob. 9SQCh. 10.A - Prob. 10SQCh. 10.A - Prob. 11SQCh. 10.A - Prob. 12SQCh. 10.A - Prob. 13SQCh. 10.A - Prob. 14SQCh. 10.A - Prob. 15SQCh. 10.A - Prob. 16SQCh. 10.A - Prob. 17SQCh. 10.A - Prob. 18SQCh. 10.A - Prob. 19SQCh. 10.A - Prob. 20SQCh. 10 - Prob. 1SQPCh. 10 - Prob. 2SQPCh. 10 - Prob. 3SQPCh. 10 - Prob. 4SQPCh. 10 - Prob. 5SQPCh. 10 - Prob. 6SQPCh. 10 - Prob. 7SQPCh. 10 - Prob. 8SQPCh. 10 - Prob. 9SQPCh. 10 - Prob. 10SQPCh. 10 - Prob. 11SQPCh. 10 - Prob. 1SQCh. 10 - Prob. 2SQCh. 10 - Prob. 3SQCh. 10 - Prob. 4SQCh. 10 - Prob. 5SQCh. 10 - Prob. 6SQCh. 10 - Prob. 7SQCh. 10 - Prob. 8SQCh. 10 - Prob. 9SQCh. 10 - Prob. 10SQCh. 10 - Prob. 11SQCh. 10 - Prob. 12SQCh. 10 - Prob. 13SQCh. 10 - Prob. 14SQCh. 10 - Prob. 15SQCh. 10 - Prob. 16SQCh. 10 - Prob. 17SQCh. 10 - Prob. 18SQCh. 10 - Prob. 19SQCh. 10 - Prob. 20SQ
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- Aggregate demand and aggregate supply, based on a problem from “Principles of Economics” by N. Gregory Mankiw a) List the components of country’s GDP in an open economy. For each component, provide an example of an event that would cause a shift of the aggregate demand curve to the right.b) What will be the effect of such events on the level of prices and the real outcome in the short run? Provide a graph.c) What will be the effect of such events on the level of prices and the real outcome in the longrun? Update your grapharrow_forwardThe economy of Moneyland has an actual unemployment rate that is less than the natural unemployment rate. (d) Assume instead that the government of Moneyland decides not to take any policy action. Will short-run aggregate supply increase, decrease, or stay the same in the long run? Explain.arrow_forwardb.Explain the Short Run Aggregate Supply curve and the assumptions that support its shape. List the assumptions, discuss the shape of the SR AS curve and why it takes that shape. Discuss the difference in the shape of the curve at levels below full employment GDP and what you see at levels above full-employment GDP.arrow_forward
- 3)Show and explain the effects of an increase in aggregate demand in the long-run and short-run by using AD–AScurves.2)Show and explain by using a graph, what will happen to the price level and real GDP if the quantity of moneyincreases and the increase is not anticipated; that is, the price level is not expected to change.1)By using aggregate demand (AD) and aggregate supply (AS) curves, show and explain the effects of ananticipated increase in money supply on macroeconomic equilibrium according to Rational ExpectationsHypothesis.arrow_forwardUse an aggregate demand and supply diagram to illustrate and explain the following will affect the equilibrium price level and the real GDP. Describe and analyze the new situation (inflationary gap, recessionary gap, and stagflation).How should the situation be rectified to return to full employment? Workers epect high future inflation and negotiate higher prices nowarrow_forwardIf the price level increases in the economy, A) The total spending in the economy will fall. B)The aggregate supply will fall and shift to the left. C) The total spending in the economy will rise.arrow_forward
- 1. Use the AD-AS model attached to explain and illustrate the difference between demand side measures and supply side measures and give an example of each. Also mention which markets are embedded within each curve. 2. Use the AD-AS model to Analyze and illustrate the short run impact of an increase in energy prices on GDP, inflation and employment. Which type of inflation is this?arrow_forward1. The expenditure and tax multiplier . Take an example 2. Short-run and long-run aggregate supply. Take an example 3. Equilibrium in the AD-AS model and its changes in the short run. Take an examplearrow_forwardThe consequences of climate change on the economy is a popular topic in the media. Suppose that a series of wildfires destroys crops in the western states at the same time a hurricane destroys refineries on the Gulf Coast. a) Using aggregate demand and supply analysis, explain how output and the inflation rate would be affected in the short and long runs. b) Show your answer graphically. Note: don't use chat gptarrow_forward
- Explain why the aggregate supply(AS) curve gets steeper as real GDP increases.. . . DO NOT COPY AND PASTE. please be precise to the question and answer in OWN WORDS.arrow_forward09. 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…arrow_forwardThe task I am struggling with: Using aggregate demand, short-un aggregate supply, and long-run aggregate supply curves, explain the process by which each of the following government policies will move the economy from one long-run macroeconomic equilibrium to another. Illustrate with diagrams. In each case, what are the short-run and long-run effects on the aggregate price level and aggregate output? a) There is an increase in taxes on households. b) There is an increase in the quantity of money. c) There is an increase in government spending. Thank you very much for your help.arrow_forward
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