Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
Question
Chapter 15, Problem 10PA

Sub part (a):

To determine

The impact of optimistic future expectations by the firms in the economy.

Sub part (b):

To determine

The impact of optimistic future expectations by the firms in the economy.

Sub part (c):

To determine

The impact of optimistic future expectations by the firms in the economy.

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Suppose firms become very optimistic about future business conditions and invest heavily in new capital equipment. a. Draw an aggregate-demand/aggregate-supply diagram to show the short-run effect of this optimism on the economy. Label the new levels of prices and real output. Explain in words why the aggregate quantity of output supplied changes. b. Now use the diagram from part (a) to show the new long-run equilibrium of the economy. (For now, assume there is no change in the long run aggregate-supply curve.) Explain in words why the aggregate quantity of output demanded changes between the short run and the long run. c. How might the investment boom affect the long run aggregate-supply curve? Explain
Suppose firms become very optimistic about future business conditions and invest heavily in new capital equipment. a. Draw an aggregate-demand/aggregate-supply diagram to show the short-run effect of this optimism on the economy. Label the new levels of prices and real output. Explain in words why the aggregate quantity of output supplied changes. b. Now use the diagram from part (a) to show the new long-run equilibrium of the economy. (For now, assume there is no change in the long run aggregate-supply curve.) Explain in words why the aggregate quantity of output demanded changes between the short run and the long run. c. How might the investment boom affect the long run aggregate-supply curve? Explain Plaese mam/sir give me answer in deatail as soon as possible please
Part (e) of the following question:   Assume that a country’s economy is in long-run equilibrium.    (a) Using a correctly labeled graph of aggregate demand, short-run aggregate supply, and long-run aggregate supply, show the short-run equilibrium price level, labeled PL1, and output level, labeled Y1.    (b) Assume that increased uncertainty has reduced business orders for equipment. What is the impact of the change in business orders on each of the following in the short run?  (i) Aggregate demand. Explain.  (ii) Employment    (c) Based on the change in business orders, what will happen to the long-run economic growth rate? Explain.    (d) Using a correctly labeled graph of the loanable funds market, show the effect of the change in business orders on the real interest rate in the country in the short run.    (e) Given the effect on the real interest rate identified in part (d), what will happen to each of the following?  (i) The supply of the country’s currency on the foreign…
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  • Suppose that firms become very pessimistic about future business conditions and cut heavily on investment in capital equipment.  Show the long-run equilibrium of the economy. Explain what happens to Price level and Quantity of Output in the long run equilibrium. Explain in words why the aggregate quantity of output demanded changes between the short run and the long run. [No policy involvement]
    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 graph
    question 1- Along the short-run aggregate supply curve (SRAS), an increase (rightward shift) in the aggregate demand curve will increase:a. both the price level and real GDP.b. real GDP without raising the price level.c. the price level without affecting real GDP.d. the price level but reduce real GDP.   question 2- Which of the following would cause an increase (rightward shift) in the short-run aggregate supply curve (SRAS)?a. An increase in the long-run aggregate supply curve (LRAS).b. A decrease in the CPI.c. An increase in the CPI.d. A decrease in oil prices.
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