Foundations of Economics, Student Value Edition Plus MyLab Economics with eText -- Access Card Package (8th Edition)
8th Edition
ISBN: 9780134641843
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 29, Problem 7IAPA
To determine
To explain:
The effect of increase in price of oil on the U.S. macroeconomic equilibrium in the short run and the process by which the economy is restored to full employment.
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For the following events, explain the short-run and long-run effects on output and the price level, assuming policymakers take no action. You need to draw the AD-SRAS-LRAS diagram for the Canadian economy, starting in a long-run equilibrium. Make sure to illustrate its effect using a well-labeled diagram . Assume that there is a large increase in demand for Canadian exports. Show the resulting short run equilibrium on your graph. In this short-run equilibrium, is the unemployment rate likely to be higher or lower than it was before the increase in exports? Explain it. Explain how the economy adjusts back to long-run equilibrium. When the economy has adjusted back to long-run equilibrium, how would the values of each of the following have changed relative to what they were before the increase in exports? a. Real GDP b. The price level (CPI) . c. The unemployment rate
Which of the following is implied by a rightward shift in the economy's AS curve?
There is a demand shock.
The same output will be produced, but only at a higher price level.
At any given price level, a higher level of output will be supplied.
At any given price level, a lower level of output will be supplied.
Beginning in March 2013, federal government spending was resstrained due to the sequester (feel free to Google details). Moreover, then President Obama’s budget proposals called for cuts in various types of government spending over the next ten years. Use the AD-AS model (along with a labor market graph) to show and explain how this will affect Y, N, W/P, and P over time. As an aside, recent news reports have suggested that the possibility of a renewed use of the sequester is part of the current political maneuvering over the federal budget for the fiscal year that starts October 1st.
Chapter 29 Solutions
Foundations of Economics, Student Value Edition Plus MyLab Economics with eText -- Access Card Package (8th Edition)
Ch. 29 - Prob. 1SPPACh. 29 - Prob. 2SPPACh. 29 - Prob. 3SPPACh. 29 - Prob. 4SPPACh. 29 - Prob. 5SPPACh. 29 - Prob. 6SPPACh. 29 - Prob. 7SPPACh. 29 - Prob. 8SPPACh. 29 - Prob. 9SPPACh. 29 - Prob. 10SPPA
Ch. 29 - Prob. 11SPPACh. 29 - Prob. 1IAPACh. 29 - Prob. 2IAPACh. 29 - Prob. 3IAPACh. 29 - Prob. 4IAPACh. 29 - Prob. 5IAPACh. 29 - Prob. 6IAPACh. 29 - Prob. 7IAPACh. 29 - Prob. 8IAPACh. 29 - Prob. 9IAPACh. 29 - Prob. 10IAPACh. 29 - Prob. 1MCQCh. 29 - Prob. 2MCQCh. 29 - Prob. 3MCQCh. 29 - Prob. 4MCQCh. 29 - Prob. 5MCQCh. 29 - Prob. 6MCQCh. 29 - Prob. 7MCQ
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- During spring 2016 the Midwestern United States, which has a large agricultural base, experiences above-average rainfall. Using the AD/AS diagram, what is the effect on output, the price level, and employment?arrow_forwardPlease no hand written solution For the following events, explain the short-run and long-run effects on output and the price level, assuming policymakers take no action. You need to draw the AD-SRAS-LRAS diagram for the Canadian economy, starting in a long-run equilibrium. Make sure to illustrate its effect using a well-labeled diagram. Assume that there is a large increase in demand for Canadian exports. Show the resulting short-run equilibrium on your graph. In this short-run equilibrium, is the unemployment rate likely to be higher or lower than it was before the increase in exports? Explain it. Explain how the economy adjusts back to long-run equilibrium. When the economy has adjusted back to long-run equilibrium, how would the values of each of the following have changed relative to what they were before the increase in exports? Real GDP The price level (CPI) The unemployment ratearrow_forward“Members of Congress are interested in increasing the minimum wage from its current rate of $7.25 an hour to $15. What effect will this have on the unemployment rate for low-skilled workers? How is this likely to impact equilibrium output and the price level in the short run?"arrow_forward
- Can someone help me graph the following explaination? Following the wage and price adjustments, the short run AS curve shifts rightward, moving the economy towards a new equilibrium (point C) where output returns to its potential level. The price level at point C will likely be lower than at point A, reflecting the adjustment in wages and prices. Now, let's illustrate the AS-AD diagram for point c, showing the short-run impact of these combined policy actions. The AS-AD diagram illustrates the short-run impact of the combined fiscal policy actions. Initially, the economy is at potential output at point A. The aggregate demand (AD) curve then shifts leftward due to the government spending cut and tax increase, moving the economy to a new short-run equilibrium at point B. This shift represents a decrease in real GDP and a potential change in the price level, indicating a slowdown in economic activity and possibly higher unemployment.arrow_forwardSuppose an economy is at the short run equilibrium which its current output level called Y1, is below the full employment output level called Yf. If the government does nothing, discuss how the economy restores its long run equilibrium level of output?arrow_forwardMembers of Congress are interested in increasing the minimum wage from its current rate of $7.25 an hour to $15. What affect will this have on the unemployment rate for low skilled workers? How is this likely to impact equilibrium output and the price level in the short run?arrow_forward
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