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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Explain whether each of the following events will increase, decrease, or have no effect on long-run aggregate supply.

a. The United States experiences a wave of immigration.

b. Congress raises the minimum wage to $15 per hour.

c. Intel invents a new and more powerful computer chip.

d. A severe hurricane damages factories along the East Coast.

Sub part (a):

To determine

Impact of different events on the long run aggregate supply.

Explanation

The supply depends on the price level in the economy. When the price level is higher, the suppliers will be receiving higher income and this would incentivize them to increase the supply in the economy and vice versa. The aggregation of the supply curves of all the firms in the economy is known as the aggregate supply curve. In the short run period, the aggregate supply curve represents the relationship between the price level in the economy and the supply by the firms. There are many factors which leads to the shift in the aggregate supply curve and they are the size of the labor force used in the process of production, the level of capital stock...

Sub part (b):

To determine

Impact of different events on the long run aggregate supply.

Sub part (c):

To determine

Impact of different events on the long run aggregate supply.

Sub part (d):

To determine

Impact of different events on the long run aggregate supply.

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