Discuss about the three time horizons and what is the difference between the immediate short-run (ISR) and the short-run (SR) aggregate supply? a) In the immediate short run (IMR), ( input, output, both input & output ) prices are fixed, and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ), and firms collectively supply exactly the level of output demanded at any given price level. b) In the short run (SR), ( input, output, both input & output ) prices are fixed or nearly fixed, and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ) This is because nominal wages and input prices adjust only slowly to changes in the price level. With this curve, an increase in the price level increases real output and a decrease in the price level reduces real output. c) In the long run, all prices are ( fixed, flexible ) and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ) at the economy's ( f_ output, because the rise in wages and other inputs will match changes in the price level. ) level of The main difference between the immediate short-run and the short-run aggregate supply is then the flexibility of ( input, output ) prices in the short run.
Discuss about the three time horizons and what is the difference between the immediate short-run (ISR) and the short-run (SR) aggregate supply? a) In the immediate short run (IMR), ( input, output, both input & output ) prices are fixed, and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ), and firms collectively supply exactly the level of output demanded at any given price level. b) In the short run (SR), ( input, output, both input & output ) prices are fixed or nearly fixed, and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ) This is because nominal wages and input prices adjust only slowly to changes in the price level. With this curve, an increase in the price level increases real output and a decrease in the price level reduces real output. c) In the long run, all prices are ( fixed, flexible ) and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ) at the economy's ( f_ output, because the rise in wages and other inputs will match changes in the price level. ) level of The main difference between the immediate short-run and the short-run aggregate supply is then the flexibility of ( input, output ) prices in the short run.
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter10: Dynamic Change, Economic Fluctuations, And The Ad-as Model
Section: Chapter Questions
Problem 2CQ
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Transcribed Image Text:Discuss about the three time horizons and what is the difference between the immediate short-run
(ISR) and the short-run (SR) aggregate supply?
a) In the immediate short run (IMR), ( input, output, both input & output ) prices are fixed, and
the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ), and
firms collectively supply exactly the level of output demanded at any given price level.
b) In the short run (SR), ( input, output, both input & output ) prices are fixed or nearly fixed, and
the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ) This is
because nominal wages and input prices adjust only slowly to changes in the price level. With
this curve, an increase in the price level increases real output and a decrease in the price level
reduces real output.
c) In the long run, all prices are ( fixed, flexible ) and the aggregate supply curve is ( upward sloping,
downward sloping, horizontal, vertical ) at the economy's ( f_
output, because the rise in wages and other inputs will match changes in the price level.
) level of
e
The main difference between the immediate short-run and the short-run aggregate supply is then the
flexibility of ( input, output ) prices in the short run.
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