Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Chapter 9, Problem 2RQ
To determine
The reason for measuring short run-output in percentage rather than in dollars.
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Why do we measure short-run output Y~in percentage terms rather than in
dollar terms?
Why do we measure short-run output Y in percentage terms rather than in dollar terms? Explain in detail please
Derive graphically AS curve and explain in depth why the short-run AS curve is upward sloped
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- Starting from the natural rate of output and the natural rate of unemployment, show the short run and medium run effect of a decrease in government spending, assuming there's no change in productivity on AS-AD and PC graphsarrow_forwardThe demand for Home output from foreign countries increased in an economy which was initially in the long-run equilibrium. In the short-short-run, the economy deviated from its full employment output level. After that, in the long-run, which curve (AD, SRAS, or LRAS) would shift to direction (Left or Right)? Curve: Direction:arrow_forwardSet up an aggregate demand-aggregate supply model in the long run equilibrium. Be sure to label all parts of the graph. Now assume that the income of foreign households have increased/ What change, if any, will occur in the real GDP, the price level? What is the implied change, if any, in the unemployment rate? What type of unemployment makes up the implied change? Be sure to show all changes on the graph.arrow_forward
- Which of the following is most commonly used to monitor short-run changes in economic activity?a. the inflation rateb. real GDPc. aggregate demandd. aggregate supplyarrow_forwardHow would the long-run equilibrium output change if the price level fell? Decrease, Increase or No change?arrow_forwardAssume that the total productivity in our country decreases (a negative shock to the production function). a) Using a graph, What happens to the demand curve for labor? b) Using a graph, How would the decline in productivity affect the labor market (employment, unemployment and real wages), if labor market is always in equilibrium? c) Using a graph, How would decreases in productivity affect the labor market if unions prevented the decline in real wages?arrow_forward
- Set up an aggregate demand-aggregate supply model in the long run equilibrium. Be sure to label all parts of the graph. Now assume that the income of foreign households have increased/ What change, if any, will occur in the real GDP, the price level? What is the implied change, if any, in the unemployment rate? What type of unemployment makes up the implied change? Be sure to show all changes on the graph and provide a thorough explanation.arrow_forwardExplaining short-run economic fluctuationsarrow_forwardExplain the crash and hoover Summerizearrow_forward
- Oil price shocks have an evident impact on the short run aggregrate supply curve. With the help of a graph demonstrate how rising oil prices effect the SRAS and explain what other factors can cause this shift.arrow_forward28. Assume a country's government increases taxes and its central bank increases its administered interest rates. The actions will result in an increase in which of the following in the short run? (A) Aggregate demand (B) Aggregate supply (C) Investment spending (D) Unemployment (E) Inflationarrow_forwardAssume this economy is currently producing full-employment real GDP of B at a current price level of E. What would happen in the short run if wages increase?arrow_forward
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