EBK ECONOMICS TODAY
18th Edition
ISBN: 8220100663253
Author: Miller
Publisher: PEARSON
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Question
Chapter 11, Problem 1FCT
To determine
Whether the increased effect of sales on aggregate demand shocks or
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Could you please also sort the following shocks into positive or negative aggregate supply or aggregate demand shocks?
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New inventions occur at a faster pace
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Identify three positive demand shocks that would increase aggregate demand and three negative demand shocks that would decrease aggregate demand.
Assume that the economy is operating at or near its long‐run aggregate
Identify one negative consequence that would result from a positive demand shock and two negative consequences that would result from a negative supply shock.
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- Sort the following shocks into aggregate supply or aggregate demand shocks. Remember that "shocks” include both good and bad events. No need to motivate your answer. Fall in the price of oil A rise in consumer optimism A hurricane that destroys factories Good weather that creates a bumper crop A rise in sales taxes Foreigners buy fewer goods Fear New inventions occur at a faster pace A faster money growth ratearrow_forwardWhich of the following events would not involve a supply shock that would shift the aggregate supply curve? (i) The Cosatu union disintegrates and the minimum wage is abolished. (ii) African bank plc’s bad debt creates a financial crisis and that leads to reduction in money supply. (iii) 2016 drought destroys half of the crops farmed. (iv) A tax on sugar is levied on companies that produce sugary beverages. Group of answer choices Only ii and iv are correct. Only ii is correct. Only iii and iv are correct. Only i and ii are correct.arrow_forwardAssume that the economy is operating at or near its long‐run aggregate Identify one negative consequence that would result from a positive demand shock and two negative consequences that would result from a negative supply shock.arrow_forward
- Which of the following events will not cause a supply shock that would shift the aggregate supply curve? a.Tax for energy use introduced to help reduce global emissions b.natural disasters which destroys agricultural products c.adjustments in the interest rates for housing d.The OPEC cartel for oil prices collapses due to political disagreementsarrow_forwardWhat is positive supply shock? What are the few examples to positive supply shocks? What is the impact of positive supply shock on the aggregate demand?arrow_forwardWhich is an example of a positive supply shock? Group of answer choices: Large decrease in input prices Strong collective bargaining from unions Strict environmental protection laws Larger increase in oil prices Suppose an economy experiences a positive supply shock. What is the short-run effect on output and the price level? Group of answer choices: Output and the price level both rise. Output and the price level both fall. Output rises and the price level falls. Output falls and the price level rises.arrow_forward
- Assuming aggregate demand remains constant, supply shocks that cause a leftward shift in the aggregate supply curve will------. Select one: a. decrease prices b. increase real output c. decrease the rate of unemployment d. increase both prices and the rate of unemploymentarrow_forwardOil price shocks have an evident impact on the short run aggregate supply curve. With the help of a graph demonstrate how rising oil prices affect the SRAS and explain what other factors can cause this shift.arrow_forwardPhilotechnia requires every high school graduate to be computer literate because so many workplaces are using different forms of information technologies. How is the aggregate demand–aggregate supply model affected? Demonstrate the effect by shifting the appropriate curve or curves.arrow_forward
- If the economy begins at an equilibrium at potential output, a negative aggregate demand shock has which of the following effects in the short-ru? a. output and prices increase and unemployment falls below the natural rate b. output and prices increase and unemployment rises above the natural rate c. output and prices decrease and unemployment rises above the natural rate d. output and prices decrease and unemployment falls below the natural ratearrow_forwardWhat are the sources or determinants of energy price shocks? and explainarrow_forwardWhat are supply shocks? Why are policy choices hard when there are negative supply shocks? Would you model the pandemic of 2020 as a supply shock or a demand shock? Why?arrow_forward
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