EBK ECONOMICS TODAY
18th Edition
ISBN: 9780133920116
Author: Miller
Publisher: YUZU
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Chapter 18, Problem bFCT
To determine
How US and European recession has affected the demand for micro loans.
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- When does macroeconomic equilibrium occur? Multiple Choice When exports equal imports. When the aggregate supply equals the long-run Aggregate Supply When the aggregate demand equals the long-run Aggregate Supply. When the aggregate quantity demanded is equal to the aggregate quantity supplied.arrow_forward“The oil Price run-up of 2007-08 was caused by strong demand confronting stagnating world production. Although the causes were different, the consequences for the economy appear to have been very similar to those observed in earlier episodes, with significant effects on overall consumption spending and purchases of domestic automobiles in particular. The experience of 2007-08 should thus be added to the list of recessions to which oil prices appear to have made a material contribution.” Source: Hamilton, J.D., 2009. Causes and Consequences of the Oil Shock of 2007-08 (No. w15002). National Bureau of Economic Research. a) Oil 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. b) Different theories…arrow_forwardWhy do you think gas prices rose in the recessions of the 1970s but fell after the Great Recession?arrow_forward
- Let us define "peak oil" as a point in time where the quantity of oil extracted and consumed (let's just assume these are the same) reaches a maximum and then starts to decline. Based on economic theory, (in other words, I'm not asking you to predict anything specific about the oil market in the real world, just a general theory question) should we expect this period of declining production to be accompanied by high and rising prices or by low/falling prices? Give a brief explanation using graphs where appropriate.arrow_forwardExplain the dynamic effect by taking "Oil Prices and Inflation" as an example?arrow_forwardDescribe how different parts of the economy may have experienced shifts and changes in supply and demand. Provide at least 4 examples.arrow_forward
- If households decide to save a larger portion of their income, what effect would this have on the output, employment, and price level in the short run? What about the long run?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_forwardWhat happens when firms and workers underestimate future prices in the economy? Explain the answer while focusing on what would happen to actual output as opposed to the expected potential output.arrow_forward
- Explain the concept of excess demand in macroeconomics. Also, explain the role of open market operation in correcting it. (Kinly explain with diagram)arrow_forwardRecent data from the Bureau of Labor Statistics show that the average price level for consumers rose 5.4% over the past year. While some are expressing concern over rising inflation leading the economy to “overheat,” there is some evidence indicating that this is due to the reopening of the economy as producers adjust to rising demand for goods and services. Many of the goods with the largest price increases, like bacon or cars and trucks, cannot have their production ramped up as quickly as demand is increasing. Other industries are facing supply chain challenges, like shortages of truck drivers. These problems are most likely to be short term, so, as supply catches up with demand, we can expect to see prices return to normal. As evidence, after spiking to record highs in early summer, lumber prices have now fallen below their price at the start of the year. The reason for the dramatic price increase earlier in the year was a combination of reduced supply in 2019 and a surge in demand…arrow_forwardSuppose this economy is producing at point W. Which of the following statements would best explain this situation?arrow_forward
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