Macroeconomics (9th Global Edition)
9th Edition
ISBN: 9780134141534
Author: Andrew B. Abel, Ben Bernanke
Publisher: Pearson Global Edition
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Question
Chapter 8, Problem 4AP
To determine
To find:Whether a recession during 1973-1975 is a result of demand shock or supply shock.
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Using the AD-AS model, if consumers and business become more optimistic about the future direction of the economy and increase spending, then:
a-long-run aggregate supply will decrease.
b-aggregate demand will decrease.
c-aggregate demand will increase.
d-long-run aggregate supply will increase.
During 2000, there was a sharp reduction in stock prices and a sharp increase in the world price of crude oil. How will aggregate demand and aggregate supply in the United States be influenced by these two factors? Using the AD-AS model, explain the expected impact on output.
Please assist with the following
An increase in the price of oil is an example of a negative supply shock. Use the AD-AS model graph to explain the effect of a negative supply shock on the price levels and output levels in the economy.
Chapter 8 Solutions
Macroeconomics (9th Global Edition)
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Similar questions
- An increase in the price of oil is an example of a negative supply shock. Use the AD-AS model graph to explain the effect of a negative supply shock on the price levels and output levels in the economy.arrow_forwardAs a result of a positive supply shock, price level goes down. Use both AD-AS and MD-MS diagrams to show this event. Explain how each diagram is consistent with the outcome of the other diagram.arrow_forwardThe principal goal of the aggregate demand and aggregate supply model is to explain thearrow_forward
- Explain with the aid of a diagram An increase in the price of oil is an example of a negative supply shock. Use the AD-AS model graph to explain the effect of a negative supply shock on the price levels and output levels in the economy.arrow_forwardUsing the AD/AS model, what would be an explanation for observing an increased price level and a decreased real GDP? Group of answer choices wages have increased. productivity has increased. the money supply has increased. the money supply has decreased.arrow_forwardIn the AD/AS model, why does any given AD shock result in a different price and output effects on short-run macroeconomic equilibrium?arrow_forward
- Based on Aggregate Demand and Aggregate Supply Model, what is the effect on AD of each of the following events (will AD increase and shift to the right or decrease and shift to the left): A decrease in individual taxes. A decrease in government spending. An increase in interest rates.arrow_forwardWhat is the difference between the Keynesian zone, neoclassical zone, and intermediate zone in the AD/AS model? For each, predict the impact that an increase in aggregate demand would have on the price level relative to real GDP in each of those zones. How does the AD/AS model explain economic growth, recessions, as well as changes in unemployment and inflationary pressures?arrow_forwardUse the AD - AS model in the figure below to answer the following questions. Suppose the economy is currently experiencing an inflationary gap, without any government policy intervention, the economy would move from ◻ a) C to D b) B to A c) C to B d) A to E e) E to Aarrow_forward
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