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Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
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Chapter 24, Problem 5SCQ
Suppose the U.S. Congress passes significant immigration reform that makes it more difficult for foreigners to come to the United States to work. Use the AD/AS model to explain how this would affect the equilibrium level of
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Where does GDP fit into an AD/AS model?
For the following question , please indicate whether current GDP of the United States will be affected and, if so, by how much .In each case, indicate also which component(s) of GDP will be affected and by how much
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The imaginary country of Harris Island has the aggregate supply and aggregate
demand curves as Table shows.
Price Level: AD/AS
Price Level AD
AS
100
800
300
120
700
425
140
600
600
160
500
670
180
400
720
Plot the AD/AS diagram (You don't have to submit the plot, but I recommend doing
it as it will help you with this problem). Identify the equilibrium.
Blank #1 - Equilibrium Price Level
Blank #2 - Equilibrium GDP
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or low?
Blank #4 - Would you expect concern about inflation in this economy to be
relatively high or low?
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and so AD becomes lower by 275 at every price level.
Blank #5 - What is the new equilibrium GDP?
Blank #6 - What is the new equilibrium Price Level?
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Chapter 24 Solutions
Principles of Economics 2e
Ch. 24 - Describe the mechanism by which supply creates its...Ch. 24 - Describe the mechanism by which demand creates its...Ch. 24 - The short run aggregate supply curve was...Ch. 24 - In the AD/AS model, what prevents the economy from...Ch. 24 - Suppose the U.S. Congress passes significant...Ch. 24 - Suppose concerns about the size of the federal...Ch. 24 - How would a dramatic increase in the value of the...Ch. 24 - Suppose Mexico, one of our largest trading...Ch. 24 - A policymaker claims that tax cuts led the economy...Ch. 24 - Many financial analysts and economists eagerly...
Ch. 24 - What impact would a decrease in the size of the...Ch. 24 - Suppose, after five years of sluggish growth, the...Ch. 24 - Suppose the Federal Reserve begins to Increase the...Ch. 24 - If the economy is operating in the neoclassical...Ch. 24 - If the economy is operating In the Keynesian zone...Ch. 24 - What is says law?Ch. 24 - What is Keynes; law?Ch. 24 - Do neoclassical economists believe in Keynes law...Ch. 24 - Does Says law apply more accurately in the long...Ch. 24 - What is on the horizontal axis of the AD/AS...Ch. 24 - What is the economic reason why the SRAS curve...Ch. 24 - What are the components of the aggregate demand...Ch. 24 - What are the economic reasons why the AD curve...Ch. 24 - Briefly explain the reason for the near-horizontal...Ch. 24 - Briefly explain the reason for the near-vertical...Ch. 24 - What is potential GDP?Ch. 24 - Name some factors that could cause the SRAS curve...Ch. 24 - Will the shift of SRAS to the right tend to make...Ch. 24 - What is stagflation?Ch. 24 - Name some factors that could cause AD to shift,...Ch. 24 - Would a shift of AD to the right tend to make the...Ch. 24 - How is long-term growth illustrated in an AD/AS...Ch. 24 - How is recession illustrated in an AD/AS model?Ch. 24 - How is cyclical unemployment illustrated in an...Ch. 24 - How is the natural rate of unemployment...Ch. 24 - How is pressure for inflationary price increases...Ch. 24 - What are some of the ways in which exports and...Ch. 24 - What is the Keynesian zone of the SRAS curve? How...Ch. 24 - What is the neoclassical zone of the SRAS curve?...Ch. 24 - What is the intermediate zone of the SRAS curve?...Ch. 24 - Why would an economist choose either the...Ch. 24 - On a microeconomic demand curve, a decrease in...Ch. 24 - Economists expect that as the labor market...Ch. 24 - If new government regulations require firms to use...Ch. 24 - During spring 2016 the Midwestern United States,...Ch. 24 - Hydraulic fracturing (tracking) has the potential...Ch. 24 - Some politicians have suggested tying the minimum...Ch. 24 - If households decide to save a larger portion of...Ch. 24 - If firms become more optimistic about the future...Ch. 24 - If Congress cuts taxes at the same time that...Ch. 24 - Suppose the level of structural unemployment...Ch. 24 - If foreign wealth-holders decide that the United...Ch. 24 - The AD/AS model is static. It shows a snapshot of...Ch. 24 - Explain why the short-run aggregate supply curve...Ch. 24 - Explain why the short-run aggregate supply curve...Ch. 24 - Why might it be important for policymakers to know...Ch. 24 - In your view, is the economy currently operating...Ch. 24 - Are Says law and Keynes law necessarily mutually...Ch. 24 - Review the problem in the Work It Out titled...Ch. 24 - The imaginary country of Harris Island has the...Ch. 24 - Table 24.4 describes Santhers economy. Plot the...
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Similar questions
- The imaginary country of Harris Island has the aggregate supply and aggregate demand curves as Table shows. Price Level: AD/AS Price Level AD AS 100 800 300 120 700 425 140 600 600 160 500 670 180 400 720 Plot the AD/AS diagram (You don't have to submit the plot, but I recommend doing it as it will help you with this problem). Identify the equilibrium. Blank #1 - Equilibrium Price Level Blank #2 - Equilibrium GDP Blank #3 - Would you expect unemployment in this economy to be relatively high or low? Blank #4 - Would you expect concern about inflation in this economy to be relatively high or low? Imagine that consumers begin to lose confidence about the state of the economy, and so AD becomes lower by 275 at every price level. Blank #5 - What is the new equilibrium GDP? Blank #6 - What is the new equilibrium Price Level? How will the shift in AD affect (answer is rise or fall)... Blank #7 - the original output? Blank #8 - the price…arrow_forwardFor the following question , please indicate whether current GDP of the United States will be affected and, if so, by how much .In each case, indicate also which component(s) of GDP will be affected and by how much In August 2020 Marie received unemployment benefits for $4,000 and, in May, she received her $1,400 Economic Impact Payment (i.e. coronavirus stimulus check) from the IRS (the tax authority in the US).arrow_forwardAfter reading the statement below you will choose 2 answers! Determine where this transaction should be classified in the GDP formula.Choose what would happen to GDP as a result of this transaction.Due to increased incomes, Europeans buy more US good and services. Your answer: CIGXMincreasedecreasearrow_forward
- Given the following: Ca = $450, Ig = $250, and G = $30, what is the economy’s equilibrium GDP if they don't have trade relation with anyone?arrow_forwardIf a Japanese tourist drinks German beer in a hotel in New York City, how will the U.S. GDP be affected? Give your answer using both the expenditure approach and the output approach.arrow_forwardMariam and Ahmed are discussing current economic data printed in the Times of Oman newspaper. Mariam is quite happy about the fact that Oman nominal GDP has increased at a steady rate for the last two years and asserts that this is very good news, since it means they are better off than a few years ago. Ahmed warns Mariam about his conclusions and suggests that he has observed a steady increase in many prices during the same period, which might undermine Mariam's conclusion. Based on this information: 6. Who do you think is right? Explain why. b. Is it possible that Mariam and Ahmed could be worse off than two years ago? а.arrow_forward
- are savings and spending on imports included in aggregate expenditure?arrow_forwardfor the following question , please indicate whether current GDP of the United States will be affected and, if so, by how much .In each case, indicate also which component(s) of GDP will be affected and by how much Case 1: Maria moved from Chicago to Colorado in November 2020. She paid $1,200 to the professional moving company she hired and, after the moving was completed, she tipped the workers $250.arrow_forwardSavings and wealth - Although the United States is one of the richest nations in the world, it is also one of the world's largest debtor nation. We often hear that the problem is our low savings rate. Suppose policy makers attempt to rectify this be encouraging greater savings in the economy. What could they do to make you save more? Would raising minimum wage help? What effects would their successful attempts have on GDP? Is this a good or bad idea? What can you do to increase your savings rate? Also, how is wealth related to savings?arrow_forward
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