Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 23, Problem 1PA
Sub part (a):
To determine
Long run equilibrium in AD-AS model.
Sub part (b):
To determine
Long run equilibrium in AD-AS model.
Sub part (c):
To determine
Long run equilibrium in AD-AS model.
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Now suppose that a boom in stock market causes aggregate demand to rise. Use your diagram to show what happens to output and the price level in the short run. What happens to the unemployment rate?
Draw a diagram to illustrate the state of the economy. Be sure to show aggregate demand, short-run aggregate supply, and long-run aggregate supply.
Draw lines for the long-run aggregate supply curve. Explain its shape and what can cause it to move in a few sentences.
b. Now add in the short run aggregate supply curve. What explains its shape and what can cause it to move?
c. On a new diagram, draw the aggregate demand curve. Explain its shape and what can cause it to shift.
d. Why do we have short- and long-run supply curves but only one (ie not short or long-run) demand curve?
b) Now suppose that a stock market crash causes aggregate demand to fall. Use your diagram to show what happens to output and the price level in the short-run . What happens to the unemployment rate?
C) Use the sticky-warge theory of aggregate supply to explain what will happen to output and the price level in the long run(assuming no change in policy).What role does the expected price level play in this adjustment? Be sure to illustrate your analysis in a graph.
Chapter 23 Solutions
Essentials of Economics (MindTap Course List)
Ch. 23.1 - Prob. 1QQCh. 23.2 - Prob. 2QQCh. 23.3 - Prob. 3QQCh. 23.4 - Prob. 4QQCh. 23.5 - Prob. 5QQCh. 23 - Prob. 1CQQCh. 23 - Prob. 2CQQCh. 23 - Prob. 3CQQCh. 23 - Prob. 4CQQCh. 23 - Prob. 5CQQ
Ch. 23 - Prob. 6CQQCh. 23 - Prob. 1QRCh. 23 - Prob. 2QRCh. 23 - Prob. 3QRCh. 23 - Prob. 4QRCh. 23 - Prob. 5QRCh. 23 - Prob. 6QRCh. 23 - Prob. 7QRCh. 23 - Prob. 1PACh. 23 - Prob. 2PACh. 23 - Prob. 3PACh. 23 - Prob. 4PACh. 23 - Prob. 5PACh. 23 - Prob. 6PACh. 23 - Prob. 7PACh. 23 - Prob. 8PACh. 23 - Prob. 9PACh. 23 - Prob. 10PA
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