Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 15, Problem 2E
(a)
To determine
Impact of shock on labor market.
(b)
To determine
Impact of TFP shock when prices are rigid.
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In long run macroeconomic models the effects of exogenous shocks, price
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QUESTIONS
How did the AD/AS equilibrium change over time? Support your claims by referring to your AD/AS model.
Select an economic factor (GDP, unemployment, price level) and explain what impact any shifts in AD or AS (or both) had on your chosen factor.
Coronavirus pandemic and resultant shutdown measures to contain it have plunged the economies around the world including Singapore into severe contraction. Assuming Singaporean economy was in long run equilibrium in the aggregate demand and supply (AD-AS) model before the pandemic (and consequent shutdown) started, answer the questions below:
Now assume that the contraction in the Singaporean economy is mainly driven by supply side factors, Show the short-run effects of this using the AD-AS model.
Chapter 15 Solutions
Macroeconomics (Fourth Edition)
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- Coronavirus pandemic and resultant shutdown measures to contain it have plunged the economies around the world including Singapore into severe contraction. Assuming Singaporean economy was in long run equilibrium in the aggregate demand and supply (AD-AS) model before the pandemic (and consequent shutdown) started, answer the questions below: a) Assuming the contraction in the Singaporean economy is mainly driven by demand side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words (100 or less) and using a graph. b) Now assume that the contraction in the Singaporean economy is mainly driven by supply side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words (100 or less) and using a graph.arrow_forwardCoronavirus pandemic and resultant shutdown measures to contain it have plunged the economies around the world including Singapore into severe contraction. Assuming Singaporean economy was in long run equilibrium in the aggregate demand and supply (AD-AS) model before the pandemic (and consequent shutdown) started, answer the questions below: a) Assuming the contraction in the Singaporean economy is mainly driven by demand side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words (100 or less). Graph Explanation b) Now assume that the contraction in the Singaporean economy is mainly driven by supply side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words (100 or less). Graph Explanation [1] Make sure to label the variables represented on the X-axis and Y-axis of the graph clearly. Also mark the curves in the graphs clearly…arrow_forwardCovid-19 global economic pandemic has negatively affected economies as a whole at the global,national and regional levels. The novel effects of the fluidity of Covid-19 appears to continue to have negative impacts on the macro business model as the global recession seems to be inevitable.You are working as a macroeconomist in economic affairs in your local country, and you are tasked with analyzing the impact of Covid-19 on the economy and you are required to prepare notes on what specific government policies can be implemented as a stimulus package to jump-start the economy savings and investment market. The team meeting will be held in 3 days from the date of the assignment and because of limitation of time the Chief economist has given you the following guidelines: Help me in identifying four (4) key macroeconomic issues from the impact of Covid-19, For each issue identifed above explain in detail what specific government policy/ies would you implementarrow_forward
- Coronavirus pandemic and resultant shutdown measures to contain it have plunged the economies around the world including Singapore into severe contraction. Assuming Singaporean economy was in long run equilibrium in the aggregate demand and supply (AD-AS) model before the pandemic (and consequent shutdown) started, answer the questions below: a) Assuming the contraction in the Singaporean economy is mainly driven by demand side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words b) Now assume that the contraction in the Singaporean economy is mainly driven by supply side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words c) Which of the above mentioned two recessions scenarios, is more challenging for the policy makers to deal with (the government and the central bank)? and why?arrow_forwardCoronavirus pandemic and resultant shutdown measures to contain it have plunged the economies around the world including Singapore into severe contraction. Assuming Singaporean economy was in long run equilibrium in the aggregate demand and supply (AD-AS) model before the pandemic (and consequent shutdown) started, answer the questions below: Assuming the contraction in the Singaporean economy is mainly driven by demand side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words (100 or less)arrow_forwardCovid-19 global economic pandemic has negatively affected economies as a whole at the global, national and regional levels. The novel effects of the fluidity of Covid-19 appears to continue to have negative impacts on the macro business model as the global recession seems to be inevitable. You are working as a macroeconomist in economic affairs in your local country, and you are tasked with analyzing the impact of Post-Covid-19 on the economy and you are required to prepare notes on what specific government policies can be implemented as a stimulus package to jump-start the economy savings and investment market. The team meeting will be held in 3 days from the date of the assignment and because of limitation of time the Chief economist has given you the following guidelines: (a) You are required to identify four (4) key macroeconomic issues from the impact of Covid-19, (b) For each issue identify in (a) explain in detail what specific government Post-Covid-19 policy/ies would you…arrow_forward
- Covid-19 global economic pandemic has negatively affected economies as a whole at the global, national and regional levels. The novel effects of the fluidity of Covid-19 appears to continue to have negative impacts on the macro business model as the global recession seems to be inevitable. You are working as a macroeconomist in economic affairs in your local country, and you are tasked with analyzing the impact of Post-Covid-19 on the economy and you are required to prepare notes on what specific government policies can be implemented as a stimulus package to jump-start the economy savings and investment market. The team meeting will be held in 3 days from the date of the assignment and because of limitation of time the Chief economist has given you the following guidelines: (a) You are required to identify four (4) key macroeconomic issues from the impact of Covid-19, (b) For each issue identify in (a) explain in detail what specific government Post-Covid-19 policy/ies would you…arrow_forwardThe economy of Pakistan has faced both a supply demand shock in the first quarter of 2020. Using the AS/AD model explain how you expect the economy to behave in the short and long run.arrow_forwardCoronavirus pandemic and resultant shutdown measures to contain it have plunged the economies around the world including Singapore into severe contraction. Assuming Singaporean economy was in long run equilibrium in the aggregate demand and supply (AD-AS) model before the pandemic (and consequent shutdown) started, answer the questions below: (do not explain what the lines in the graph mean. explain the effects of the respective demand/supply side factors) a. Assuming the contraction in the Singaporean economy is mainly driven by demand side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words (100 or less)(explain the demand side factors not what the lines in the graph are). b. Now assume that the contraction in the Singaporean economy is mainly driven by supply side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words (100 or less)(explain the supply side factors not what the lines in the graph are).…arrow_forward
- Using the 3-equation model provide a detailed period by period description of theadjustment process for the following scenarios:(a) The economy is hit by a temporary inflationary shock (b) The economy is hit by a permanent positive aggregate demand shockarrow_forwardShort-run fluctuations are all of the following EXCEPT a-sometimes called business cycle movements b-permanent changes to output growth c-called recessions when output falls below trend growth d-temporary movements of output away from the long-run output growth trendarrow_forwardOil price shocks have an evident impact on the short run aggregrate supply curve. With the help of a graph demonstrate how rising oil prices effect the SRAS and explain what other factors can cause this shift.arrow_forward
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