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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

The imaginary country of Harris Island has the aggregate supply and aggregate demand curves as Table 24.3 shows.

Chapter 24, Problem 60CTQ, The imaginary country of Harris Island has the aggregate supply and aggregate demand curves as Table

a. Plot the AD/AS diagram. Identify the equilibrium.

b. Would you expect unemployment in this economy to be relatively high or low?

C. Would you expect concern about inflation in this economy to be relatively high or low?

d. Imagine that consumers begin to lose confidence about the state of the economy, and so AD becomes lower by 275 at every price level. Identify the new aggregate equilibrium.

e. How will the shift in AD affect the original output, price level, and employment?

a)

To determine

Graphical Representation of given data on AD and AS model.

Explanation

In the above diagram, Equilibrium is attained at intersection of AD and AS curve...

b)

To determine

Impact on unemployment level.

c)

To determine

Impact on inflation.

d)

To determine

New equilibrium level as Aggregate demand curve fell by 275 at every price level.

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