Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Chapter 14, Problem 1QR
To determine
The theories of
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Discuss scenarios by giving practical examples. What might shift the aggregate-supply curve to the left? Use the model of aggregate demand and aggregate supply to trace through the short-run and long-run effects of such a shift on output and the price level.
What are three factors that help explain the slope of the aggregate demand curve? What is the most important factor? Why?
Suppose that an economy wants to boost available labor hours in order to increase aggregate supply. What is the best way to accomplish this?
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- Explain the factors that cause the Aggregate Demand curve to be downward sloping left to right.arrow_forwardBased on the picture, explain what happens to the aggregate demand. Describe your answer.arrow_forwardIf the price level rises and the money wage rate rises by the same percentage, what happens to the quantity of real GDP supplied? Along which aggregate supply curve does the economy move?arrow_forward
- Why aggregate demand curve slopes downwards? Why aggregate supply slopes upwards?arrow_forwardAnswer the following questions below a) What relationship does the aggregate demand curve show? b) What relationship does the short run aggregate supply curve show?arrow_forwardTrue or False? Looking along the aggregate demand curve, deflation will lead to a lower level of GDP.arrow_forward
- What factors shift the short-run aggregate supply curve?Do any of these factors shift the long-run aggregate supply curve? Why?arrow_forwardWhat effects would each of the following have on aggregate demand or aggregate supply? Justify your answer. In each case use a diagram to show the expected effects on the equilibrium price level and real output level in the economy. Assume that all other things remain constant and prices are inflexible downward. (a) A reduction in interest rates at each price level (b) A sizable increase in labor productivity. (c) The nation’s currency appreciates against its major trading partners .arrow_forwardAssume that you live in a country that is a major importer of Russian oil. How will the Russian invasion of Ukraine and subsequent international sanctions against Russian exports affect your nation. a. What curve would shift first in an Aggregate Demand Aggregate Supply model for your country? b. How would the aggregate price level and aggregate output level change in the short run? What is this phenomenon called?arrow_forward
- Using aggregate demand and aggregate supply, graph the effects on the price level and GDP of each of the following. Draw a large graph and label all axes, initial and final equilibrium points, direction of shift if any, all curves and lines, equilibrium values on the x- and y-axes. State the conclusion in words. a. A cut in income taxes b. An increase in military spending c. A drop in export demand by foreign purchasers d. An increase in imports e. A decline in business investment spendingarrow_forwardWhat determines aggregate supply in the short run and what determines it in the long run?arrow_forwardUsing the aggregate supply–aggregate demand model, explain how output and prices are determined. Will output vary or stay fixed in the long run? Suppose the aggregate demand curve were to remain fixed: What can we infer about the behavior of prices over time?arrow_forward
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