According to your figure, the eventual long-run impact of the increase in aggregate demand is A. higher prices, lower output. B. higher prices, higher output. C. higher prices, unchanged output. D. higher output, unchanged prices.
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- Changes in macroeconomic indicators can often be of relevance to business decision-making. For instance, changes in macroeconomic performance reflected in indicators can impact things such as firms profit forecasts, expected sales growth, expansion plans, etc.Assume you are employed as a business analyst with the large Australian based mining company. Identify and discuss how each of thefollowing macroeconomic issues may be relevant to the firm:a) A world-wide economic slow-down.b) Appreciation of the Australian dollar relative to other major currencies.c) The government abolishes subsidies to the mining industry.Assume that the long-run aggregate supply curve is vertical at Y = 3.000 while the short-run aggregate supply curve is horizontal at P=1.0, . The aggregate demand curve is Y = 2(M / P) and M = 1,500. Suppose the aggregate demand function shifts to Y = (1.5)(M / P) . What are the short- run values of P and Y? Show the change in short and long- run equilibrium graphically . Describe the short- run and long- run effects of the change in demand .Determine the effect on aggregate demand/ Short Run Agrregate supply of each of the followingevents. Explain whether it represents a movement along the aggregate demand/ Short run Aggregatesupply curve (up or down) or a shift of the curve (leftward or rightward).a) News of a worse-than-expected job market next yearb) A rise in the consumer price index (CPI) leads producers to increase output.c) A rise in legally mandated retirement benefits paid to workers leads producers to reduceoutput.d) As a result of an increase in the value of the dollar in relation to other currencies, Americanproducers now pay less in dollar terms for foreign steel, a major commodity used in production.e) An increase in the quantity of money by the Federal Reserve increases the quantity of moneythat people wish to lend, lowering interest rates.f) Greater union activity leads to higher nominal wages.g) A fall in the aggregate price level increases the purchasing power of households’ and firms’money holdings. As…
- "Fracking" is a relatively new technology that allows drillers to extract significantly larger quantities of natural gas from existing deposits than was previously possible. How is this discovery likely to affect the economy? (Hint: Think about whether this will have a short-run or long-run effect.) This discovery will likely: O increase both SRAS and LRAS, leading to a long-term increase in output and decrease in prices. O increase AD but decrease both SRAS and LRAS, leading to an uncertain change in long- term output and a decrease in prices. decrease both SRAS and LRAS, leading to a long-term decrease in output and increase in prices. O increase AD, SRAS, and LRAS, leading to a long-term increase in output and an uncertain change in prices.Consider the following extract and then answers the questions that follow: How SA's recession is impacting consumer spending Consumers are actively doing pre‐shopping research either through broadsheets or online, and comparing retailers’ offerings to seek out the best value before even leaving the house. Consumers simply no longer purchase certain items, pointing to their extreme need for frugality in current market conditions. Added to this, consumers have also changed the way they use these products in their homes to maximise usage and minimise wastage. This includes the alternative use of products, like using margarine in place of cooking oil and fragranced body lotion instead of perfume. Q1. Discuss the impact of the economy on consumer behaviour.Note: it is important that you consider using examples that is relevant and specific to the scenario provided when responding to this question. Q2. Finding cheaper prices online is one driver for online shopping. Describe any four other…Short-run macroeconomic equilibrium is when (Hint: Be careful! Be sure to return to the general definition of equilibrium): Firms have no incentive to change how much they produce O Households have bought as much as they want O Spending is equal to consumption (AE = C) O The government is content with the level of employment
- (1)The following macroeconomic model describes the economy of CSILAND. Y = C +1+ G + NX.... C = 220 + 0.60 Y.... | = 1000 - 200OR... G = . NX = 525 - 0.10Y - 500R... . (1) .(2) .(3) ..(4) (5) %3D %3D %3D Go....... %3D %3D (a)Write the expression for equilibrium real output, Y. (b)Suppose real interest is 10% and government spending is 1200, determine the value of equilibrium real output. (c)For this economy, find the level of consumption (C), investment (I), and net export (NX). (d)ls there evidence of a twin deficit in CSILAND given that tax revenue is 15% of aggregate real output? Explain.Assume an economy operates in the intermediate range of its aggregate supplycurve. For each of the following changes in conditions, state the direction of theeffect on: aggregate demand, aggregate supply, price level, real GDP.(a) A decrease in government expenditure in infrastructure(b) A severe recession occurs in a country which has been a major importer of thenation’s exports.(c) The federal government increases business taxes with diagramSuppose the order-up-to model is used to manage inventories. The firm is planning changesthat will reduce the lead time to receive replenishments because the firm anticipates thatthe coefficient of variation of demand will increase even though mean demand per periodremains the same. What can be said about the likely change in the firm’s on-order inventory? a. It will surely decrease.b. It will remain the same.c. It will surely increase.d. More information is needed to determine the impact of these changes
- Question 01 Due to COVID-19 situations the oil prices fall in international market. Let’s assume that output starts at its natural level. What happens to the country A's economy (output and price) in the short run? Explain your answer using AS-AD graphs.Which of the following would illustrate diseconomies of scale? The declining segment of the LRAC curve O a. O b. The rising segment of the SRAC curve. O c. The declining segment of the SRAC curve O d. The rising segment of the LRAC curve2. Consider the following macroeconomic model: Y = F(K.N) FK > 0, FN>0, FKK. FNN 0 FN (K, N) N" (w/p), N'>0 N" I(r = n), I' 0 N" = N I C+I+G+6K M/p = m, 0 M+B P where Y is real GDP, K is the capital stock, N is employment, w is the money wage, Nis the supply of labor, p is the price level, r is the interest rate, is the anticipated inflation rate, I is investment, C is consumption, G is government expenditure, T is net taxes. The endogenous variables are Y, N, w/p, r, p, C and I. The exogenous variables are M, B, K,G.T, . Let dk=0, and M+B> 0 i.e. public has positive net holdings of government assets. Assume the open-market operations constraint dM+dB = 0, so any change in the nominal money supply is engineered through an open market operation. In this economy, show that a change in the nominal money supply eventually has effects on the real variables of the economy (i.e. nomey is not a veil in this system). In your answer, you must show all your arguments analytically and also…