EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 24, Problem 6RQ
To determine
A macroeconomic model.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
9:22 1
LTE
Aggregate D&S assignment chap 12....
Assignment Chapter 12
1. Suppose that the aggregate demand and aggregate supply
schedules for a hypothetical economy are as shown below: LO5
Amount of
Amount of
Real GDP
Real GDP
Demanded,
Billions
Price Level
Supplied,
Billions
(Price Index)
$100
300
$450
200
250
400
300
200
300
400
150
200
500
100
100
a. Use these sets of data to graph the aggregate demand and
aggregate supply curves. What is the equilibrium price level and the
equilibrium level of real output in this hypothetical economy? Is the
equilibrium real output also necessarily the full-employment real
output?
b. If the price level in this economy is 150, will quantity demanded
equal, exceed, or fall short of quantity supplied? By what amount? If
the price level is 250, will quantity demanded equal, exceed, or fall
short of quantity supplied? By what amount?
c. Suppose that buyers desire to purchase $200 billion of extra real
output at each price level. Sketch in the new…
2. Suppose that the table below shows an economy's relationship
between real output and the inputs needed to produce that output:
LO4
Input
Quantity
Real
GDP
150.0
$400
112.5
300
75.0
200
a. What is productivity in this economy?
b. What is the per-unit cost of production if the price of each input
unit is $2?
c. Assume that the input price increases from $2 to $3 with no
accompanying change in productivity. What is the new per-unit cost
of production? In what direction would the $1 increase in input price
push the economy's aggregate supply curve? What effect would this
shift of aggregate supply have on the price level and the level of real
output?
d. Suppose that the increase in input price does not occur but,
instead, that productivity increases by 100 percent. What would be
the new per-unit cost of production? What effect would this change
in per-unit production cost have on the economy's aggregate supply
curve? What effect would this shift of aggregate supply have on the
price…
QUESTION 41
A
C
LRAS
LRAS
_LRAS
大大大
40 50
20 30 40 50
20 30
real GDP = Q
20 30
real GDP = Q
real GDP = Q
60
50
40
30
20
10
P level
0
10
-AS-
AD
+
40 50
60
50
40
30
20
10
P level
0-
41. Which of the figures above illustrates an economy in long-run equilibrium?
O a) Figure A
b) Figure B
c) Figure C
o
10
B
AS
AD
60
50
40
30
20
10
P level
0
10
-AS
AD
Chapter 24 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Knowledge Booster
Similar questions
- Suppose aggregate demand in the economy sharply decines. Keynesian economists say that the price level (at least for a time) will and real output wil O remain constant; decrease Increase; remain constant remain constant; increase decrease; remain constant lo000arrow_forwardciples of Macroeconomics || Fall20 1 What does the PPI measure? ed Select one: d out of O a the average change in the prices paid for all goods produced in the economy over a given year O b. the level of production of goods and services generated in the economy in a given year question O c. the difference between the prices consumers pay for goods and services and the prices producers pay for O d. the average of the prices received by producers of goods and services at all stages of the production pro Ti navigation Type here to searcharrow_forward1. LO 2 In the Malthusian model, suppose that the quantity of land increases. Using diagrams, deter- mine what effects this has in the long-run steady state and explain your results.arrow_forward
- Suppose the economy is in long-run equilibrium. Then because of the COVID pandemic, people become worried about their future income and retain that worry for some time. How is the new long-run equilibrium different from the original one? O a. the price level is the same and GDP is lower. O b. both price and real GDP are higher. O c. the price level is lower and real GDP is the same. O d. both price and real GDP are lower.arrow_forward5. Refer to the data in the table that accompanies problem 2. Suppose that the present equilibrium price level and level of real GDP are 100 and $225, and that data set B represents the relevant aggregate supply schedule for the economy. LO12.6 a. What must be the current amount of real output demanded at the 100 price level? b. If the amount of output demanded declined by $25 at the 100 price level shown in B, what would be the new equilibrium real GDP? In business суcle economists call this change in real terminology, what would GDP?arrow_forwardBased on Figure 3, choose the right statement. 1) Growth in output is protrade because the cloth output increased and corn output decreased, and growth in consumption is protrade because consumption of corn increased more than that of cloth. O 2) Growth in output is not protrade because the cloth output increased and corn output decreased, and growth in consumption is protrade because consumption of corn increased more than that of cloth. 3) Growth in output is protrade because the cloth output increased and corn output decreased, and growth in consumption is protrade because consumption of cloth increased more than that of corn. Growth in output is protrade because the cloth output increased and corn output decreased, and growth in consumption is not protrade because consumption of corn increased more than that of cloth. Figure 3. Economic growth Com (Tons) 80 70 20 10 A 30 III E VII 2 120 PB-1 PM-PB-1 M 250 Cloth (Yards)arrow_forward
- Suppose that the table presented below shows an economy's relationship between real output and the inputs needed to produce that output: Input Quantity Real GDP 150.0 $ 400 112.5 300 75.0 200 Instructions: Enter your responses answers rounded to 2 decimal places. a. What is the level of productivity in this economy? b. What is the per-unit cost of production if the price of each input unit is $2? $ C. Assume that the input price increases from $2 to $3 with no accompanying change in productivity. What is the new per-unit cost of production? In what direction would the $1 increase in input price push the economy's aggregate supply curve? (Click to select) v What effect would this shift of aggregate supply have on the price level and the level of real output? O The price level would decrease and real output would increase. O Both the price level and real output would remain the same. O The price level would decrease and real output would remain the same. O The price level would increase…arrow_forward: Which of the following statements is true if there is an increase in aggregate demand while the economy is in equilibrium on a positively sloping short-run aggregate supply curve? 3 - O a) Prices rise, national income does not change B) Prices decrease, national income does not change O C) Prices go up and national income goes down. O D) Prices decrease and national income decreases. O TO) Prices rise, national income risesarrow_forwardConsider the following graph. Suppose the economy is currently at point A. Suppose there is a temporary decrease in the prices of raw materials. (Raw materials are used for production.) The economy will go to point, in short run, and then point in long run. Price level O C; B OB;A OB; C O CA ODA Question 2 LRAS - O vertical straight; increase by 10 percent O upward sloping: decrease by 10 percent O vertical straight; remain unchanged O downward sloping: increase by 10 percent Odownward sloping: decrease by 10 percent SRAS₁ SRAS AD Real GDP (Y) 4 LRAS is a(n) line. If the price level drops by 10 percent, then all else being equal, the long- run quantity of aggregate supply willarrow_forward
- Price level LRAS AS1 Figure 12.8 C B A ASO AS₂ AD₁ ADO E Y2 Yo Y₁ Aggregate output ($ billion) AD₂ Refer to Figure 12.8. This economy cannot continue to produce Y₁ (or at point B) because O the price of raw material will increase, shifting the aggregate demand curve to AD2. O all of the above O the price of raw material and wages will increase shifting the aggregate supply curve to AS₁. O the price of inputs will decrease, shifting the aggregate supply curve to AS2.arrow_forwarddemanded equal, exceed, or fall short of quantity supplied? llowing L012.4 c. Suppose that buyers desire to purchase $200 billion of extra real output at each price level. Sketch in the new aggregate By what amount? demand curve as AD,. What are the new equilibriumsate Real GDP level and level of real output? 4. Suppose that the table presented below shows an economy's relationship between real output and the inputs needed to pro- 225 225 duce that output: LO12.4 225 Real GDP 225 Input Quantity 150.0 $400 in the t run? 112.5 300 75.0 200 ut per a. What is productivity in this economy? b. What is the per-unit cost of production if the price of each input unit is $2? c. Assume that the input price increases from $2 to $3 with no accompanying change in productivity. What is the new per- unit cost of production? In what direction would the $1 increase in input price push the economy's aggregate supply curve? What effect would this shift of aggregate supply have on the price level and the…arrow_forwardLAST WORD What is Say's law? How does it relate to the view held by classical economists that the economy generally will operate at a position on its production possibilities curve? Use production possibilities analysis to demonstrate Keynes's view on this matter.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education