EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 24, Problem 9DQ
To determine
A firm strives to maintain the sticky price.
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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…
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
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decrease; remain constant
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QUESTION 41
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Chapter 24 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
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- 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…arrow_forwardd. A decrease in aggregate demand. e. An increase in aggregate demand that exceeds an increase in aggrega supply.arrow_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 Canada's economy is in a long-run equilibrium with real GDP equal to potential output. Now suppose there is a decrease in world demand for Canada's goods. In the short run, O A. real GDP and the price level both fall; real GDP returns to its original level with a lower price level O B. real GDP rises and the price level falls; real GDP returns to its original level with a higher price level O C. real GDP and the price level both rise; real GDP is below its original level with a higher price level D. real GDP falls and the price level rises; real GDP is below its original level with a lower price level In the long run,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_forward3. The world was growing at a constant growth of 0.00007% rate between 100,000 BC and 1750AD. If birth rates per thousand averaged 35 during this period , what was the average death rate in equilibrium. (approximately) O 31 35 40 8. Which of the following statements is correct? A model is an exact representation of what goes on in the economy. Equilibrium in GDP growth rate is when the growth rate is zero. A model is an economic relationship that is only represented by mathematics. Equilibrium is a self-perpetuating situation that does not change, unless a force for change is introduced from the outside and alters the basic data describing the situation. 9. According to Malthus, which of the following are the not the causes of diminishing average product of labor? Environmental effects of over-cultivation (e.g. increased carbon emissions) Increase in population growth rate More labour is devoted to a fixed quantity of land. The new land brought into cultivation is of inferior quality…arrow_forward
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