EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 30.7, Problem 2QQ
To determine
Reason for upward supply curve.
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Students have asked these similar questions
4. AD; SRAS; LRAS; Short-run equilibrium; Long-run equilibrium; Recessionary gap and
Inflationary gap. Consider the diagram below, if the economy is in an inflationary gap, where is
it located with respect to both the institutional PPF and the physical PPF?
KB
LRAS
Physical PPF
SRAS,
Institutional PPF
•D
AD.
Real GDP
Good X
Real GDP
Price Level
All Oth er Goods
If the price level rises and the money wage rate remains constant, what happens to the quantity of real GDP supplied?
How does the economy move?
If the price level rises and the money wage rate remains constant, the quantity of real GDP supplied _______ and there is a movement up along the _______.
A.
increases; aggregate supply curve
B.
increases; potential GDP line
C.
does not change; aggregate supply curve
D.
does not change; potential GDP line
When the macroeconomic equilibrium is such that real GDP is less than potential real GDP, the
economy is suffering from
and the government policy to eliminate this gap will
the price level.
real GDP and to
A. an inflationary gap; increase; decrease
a recessionary gap; decrease; decrease
OC. a recessionary gap; decrease; increase
B.
D. an inflationary gap; decrease; increase
OE. a recessionary gap; increase; increase
Chapter 30 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Ch. 30.7 - Prob. 1QQCh. 30.7 - Prob. 2QQCh. 30.7 - Prob. 3QQCh. 30.7 - Prob. 4QQCh. 30.A - Prob. 1ADQCh. 30.A - Prob. 2ADQCh. 30.A - Prob. 1ARQCh. 30.A - Prob. 2ARQCh. 30.A - Prob. 1APCh. 30.A - Prob. 2AP
Ch. 30 - Prob. 1DQCh. 30 - Prob. 2DQCh. 30 - Prob. 3DQCh. 30 - Prob. 4DQCh. 30 - Prob. 5DQCh. 30 - Prob. 6DQCh. 30 - Prob. 7DQCh. 30 - Prob. 8DQCh. 30 - Prob. 9DQCh. 30 - Prob. 1RQCh. 30 - Prob. 2RQCh. 30 - Prob. 3RQCh. 30 - Prob. 4RQCh. 30 - Prob. 5RQCh. 30 - Prob. 6RQCh. 30 - Prob. 7RQCh. 30 - Prob. 8RQCh. 30 - Prob. 9RQCh. 30 - Prob. 1PCh. 30 - Prob. 2PCh. 30 - Prob. 3PCh. 30 - Prob. 4PCh. 30 - Prob. 5P
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Similar questions
- Why does the aggregate demand curve slope downward? The aggregate demand curve slopes downward because _______. A. as the price level falls, expected future income increases B. of the wealth effect and the price level effect C. as the price level falls, expected future profits increase D. of the wealth effect and the substitution effectarrow_forwardTrue or False: Aggregate demand (AD) represents the total amount of goods and services that households, firms, the government, and foreigners are willing to buy at various price levels. A. True B. Falsearrow_forward(s) possIDle The quantity of real GDP supplied decreases if the price level because it profits. A. rises; decreases B. falls; decreases C. rises; increases D. falls; increases O E. None of the above answers are correct because the AS curve is vertical so that the quantity of real GDP supplied does not change when the price level changes. ООО ооarrow_forward
- If the price level and the money wage rate rise by the same percentage, what happens to the quantity of real GDP supplied? How does the economy move? If the price level and the money wage rate rise by the same percentage, the quantity of real GDP supplied _______ and there is a movement up along the _______. A. does not change; potential GDP line B. increases; aggregate supply curve C. decreases; potential GDP line D. does not change; aggregate supply curvearrow_forwardThe vertical portion of the aggregate supply curve shows that at full employment an increase in the price level will: a.reduce the quantity of goods and services purchasers will demand. b.increase the economy's full-employment real GDP. c. not alter the economy's full-employment real GDP. d.improve the overall efficiency of resource use.arrow_forwardPrice level (P) LRAS SRAS2 SRAS, В A AD2 AD, Real GDP (7) Based on the graph, a decrease in Point D to Point A could cause the economy to move from government spending exports on apples restrictions from the Environmental Protection Agency on car production in the U.S. inflation the demand for consumer goods Question 8 Suppose housing values fell during the recession of 2008. Therefore, O the price level will fall as the aggregate demand curve shifts to the left.arrow_forward
- Which statement about the AS curve is correct? A. The AS curve shows the relationship between the quantity of real GDP supplied and potential GDP when all other influences on production plans remain the same. B. On the AS curve, t he quantity of real GDP supplied equals potential GDP at the price level at which the real wage rate is at its full-employment equilibrium level. C. Along the AS curve, a rise in the price level brings a decrease in the quantity of real GDP supplied. D. Along the AS curve, a change in the price level brings an equal percentage change in the money wage rate.arrow_forwardWhat is the effect of an increase in the price level when the money wage rate remains unchanged? A. Aggregate supply increases. B. Potential GDP increases. C. The quantity of real GDP supplied increases. D. Resource prices increase by the same percentage as the increase in the price level.arrow_forwardThe figure below depicts the economy of Altrua, which is presently in equilibrium. Enter your responses below rounded to one decimal place. AS AD LAS 340 360 380 400 420 440 460 480 500 520 Price level a. The size of its recessionary gap is $ b. The size of this gap as a percentage of its actual GDP isarrow_forward
- Thoose the correct statement. OA. The SAS curve shifts rightward when the price level falls. OB. Along the SAS curve, the real wage rate and the price level change by the same percentage. OC. In the short run, a rise in the price level brings no change in the quantity of real GDP supplied. OD. The quantity of real GDP supplied equals potential GDP at the price level at which the real wage rate is at its full-employment equilibrium level.arrow_forwardFor the U.S. economy, which of the following is the most important reason for the downward slope of the aggre-gate-demand curve?a. the wealth effectb. the interest-rate effectc. the exchange-rate effectd. the real-wage effectarrow_forward1. Aggregate demand curves slope downwards for each of the following reasons EXCEPTA. The wealth effect: As the price level falls, the buying power of people’s savings increases andinduces them to spend more.B. The substitution effect: As the price level falls, people buy more of the cheaper goods and lessof other goods.C. The interest rate effect: As prices for outputs rise, it costs more to make the same purchases,driving up the demand for money, raising interest rates and reducing investment spending.D. The foreign price effect: As the price level falls, U.S. become more attractive to foreignersand domestic residents, increasing net export spending.arrow_forward
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