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- 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 GoodsR T 3. Price level B K SAS 1 SASO Real output C. an increase in aggregate demand. D. a decrease in aggregate demand. IUO Refer to the graph shown. A movement from A to C is most likely to be caused by: A. an increase in input prices. B. a decrease in input prices. NG: Suppose the economy is initially in the long-run equilibrium in the real output market.a. Draw the initial long run equilibrium. Label the diagram clearly
- Suppose the economy is self-regulating, the price level is 132, the quantity demanded of RealGDP is 4 trillion, the quantity supplied of Real GDP in the short run is 3.9 trillion, and thequantity supplied of Real GDP in the long run is 4.3 trillion. Is the economy in short-runequilibrium? Will the price level in long-run equilibrium be greater than, less than, or equal to132? Show the relevant graph and explain your answers.1. Answer any 2 from a, b, and c below a. Why does AD slope downward? b. Which is the one example that is used in the video to explain changes in C, I, G, and NX? c. Which 2 forces are different in shifting AD?KE The economy's AS curve will shift downward in the short run if there is: A. an improvement in technology. OB. an increase in the cost of capital. O O C. an increase in the world prices of raw materials. OD. an increase in the wage rate. OE. an increase in the price level.
- A Moving to another question will save this response. Question 2 Price Level LRAS A Moving to another question will save this response. Ags D O a. this economy is in long run and short run equlibrium. O b. This economy is overheated, in equilibrium at greater than full employment. O c. there is not enough information here to even guess. O d. this economy is in recession, in equilibrium at less than full employment. SRAS #1 Real Output How would you ch AR6. Suppose political turmoil causes a significant decrease in oil production in the middle east. How will real GDP, employment, and the general price level be affected in the short run? 7. How will the event described in question 6 affect real GDP, employment, and the general price level in the long run? Explain in words and a graph.Between a trough and a peak, the economy goes through a(n) Ohyperinflation. Obust. Orecession. O expansion. QUESTION 16 A period when the economy shrinks is known as O a recession. O a contraction. O a slump. O All of these. QUESTION 17 Dean borrows $400 from Tim. Tim wants to make a 10% real return on his money, so they both agree on a 10% interest rate paid next year. Dean and Tim did not anticipate any inflation, yet the actual inflation turned out to be 4% next year. In this case, O Dean is better off. O Tim will receive more than 10% of real rate of return a year from now. O Dean will pay $56 a year from now on. Tim is better off.
- Long-run AS Price level P Shortrun AS, P--- Shortrun AS, P. M(P) M (P.) AD Y. Y Output y Money Market Investment (A) (B) (C) Figure 15.3 Refer to Figure 15.3 If this economy is initially in a recession, the price level will start to change to bring the economy back to full employment, which is reflected by the movement from O A. P, to Po O B. a to b. O C. d to c. O D. fto e. Click to select your answer. esc @ %23 24 % 3 4 7 8.8. Draw the macroeconomy in equilibrium (snowflake). What happens when aggregate demand increases? Show on graph. Label new short run equilibrium E2. What state is this economy in? a) Give an example of something that could have caused this. b) What happens to GDP and price level? c) In this scenario, what do we call the difference between actual GDP and potential GDP? d) What is the unemployment rate relative to the natural rate? e) How would the economy fix itself? This means market adjustments, not government intervention. Show on graph. Label new equilibrium E3. Briefly explain. US 1 1:3Table 24.4 describes Santhers economy. Plot the AD/AS curves and identify the equilibrium. Would you expect unemployment in this economy to be relatively high or low? Would you expect prices to be a relatively large or small concern for this economy? Imagine that input prices fall and so AS shifts to the right by 150 units. Identify the new equilibrium. How will the shift in AS affect the original output, price level, and employment?