The following events have occurred in the history of the United States: A deep recession hits the world economy. The world oil price rises sharply. S. businesses expect future profits to fall. Explain the separate effects of each event on U.S. real GDP and the price level, starting from a position of long-run equilibrium.
Q: A long-run equilibrium occurs when aggregate demand and aggregate supply are in equilibrium ____ a)…
A: In the long run, the actual GDP of an economy and the associated price levels are determined by…
Q: Suppose that the United States is at full employment. Then the federal government cuts taxes, and…
A: Hello dear student, You have asked multiple questions. I am going to answer one question out of the…
Q: terms of the aggregate supply curve, which of the following statements is true? Question 37…
A: Short run aggregate supply curve is always upward sloping because nominal wages are sticky and there…
Q: Assume that the United States economy is currently in a recession in a short-run equilibrium. Draw…
A: When the economy is in recession, real GDP is less than potential GDP.
Q: What is the effect of a rise in the price of oil on the U.S. economy? How does the economy return to…
A: The AD-AS model analyses the macroeconomic phenomenon of the economy. The intersection point of the…
Q: m price level will fall, and the equilibrium level of GDP will fall. B. Aggregate demand will…
A: 1. When consumers and businesses tend to have negative expectations about the future level of…
Q: Suppose an economy is at the short run equilibrium which its current output level called Y1, is…
A: When the current output level is below the full employment level, it means economy is not operating…
Q: The aggregate supply curve for the long run is: Group of answer choices Represents potential output,…
A: Long-run:- The term "long-run" refers to the amount of time it takes for nominal wages and other…
Q: Assume that the stock market increases by 5% this month. As a result Question 6 options: a)…
A: Stock market increases by 5% means that value of people's wealth rises.
Q: Suppose an economy is at the short run equilibrium which its current output level called Y1, is…
A: The economy is at the short run equilibrium at income Y1 and the price level P1. At this point,…
Q: Q35 The positive relationship between short-run aggregate supply and the price level indicates…
A: Aggregate supply curve is related to price and output. As money wage rate increases, aggregate…
Q: Assume that the United States economy is currently in a recession in a short-run equilibrium. Draw…
A: Assuming the economy of United States is currently in recession in a short run equilibrium.…
Q: Which of the following is true about Long Run Equilibrium? a. the economy is experiencing Long Run…
A: In the long-run, it can be said that an economy can be operated potentially by using all the…
Q: The Canadian government increases its expenditure on goods and services in a time of war or…
A: The measure that depicts the final value of goods and services within an economy during a specified…
Q: Assume that Canada is initially in long run equilibrium. Discuss how each of the following four…
A: Hi student, Thanks for posting the question. As per the guideline, we are pr0viding the answer for…
Q: The following events have occurred in the history of the United States: A deep recession hits the…
A: Deep recession will decline the economic activities in an economy which put negative impact on…
Q: In the long-run, aggregate supply is a horizontal line at the long-run price level people can…
A: However, in the long run, the level of prices has no impact on aggregate supply, which is instead…
Q: Which of the following occurs when an expansionary gap is closed in the long run by the action of…
A: Answer: Correct option: d (Output decreases, and the price level increases) Explanation: The…
Q: Suppose the economy is self-regulating, the price level is 132, the quantity demanded of Real GDP is…
A: It can be said that the economy is in short-run equilibrium as the aggregate demand (AD) is equal to…
Q: Which of the following must be true in the long run? Production increases when prices increase. An…
A: In the long run, the price of the goods and the wages are flexible in the market, that is why the…
Q: The upward slope of the short-run aggregate supply curve is based on the assumption that: 1)…
A: When talking about aggregate demand and aggregate supply, the slope of thise curves depends upon…
Q: Suppose the economy is self-regulating, the price level is 132, the quantity demanded of Real GDP is…
A: In the short run, aggregate demand is 4 trillion and aggregate supply is 3.9 trillion. Aggregate…
Q: Assume that the long-run aggregate supply curve is vertical at Y = 3.000 while the short-run…
A: Y=3000 Short run aggregate supply curve is horizontal at P= 1.0 Aggregate demand curve is; Y=2MP M=…
Q: In the following figure, an economy is currently in short-run equilibrium at point a. What is likely…
A: SRAS is used to mention short-term aggregate supply, and LRAS is used to mention long-term aggregate…
Q: Suppose that exports fall. Which of the following describes how the economy will adjust on its own…
A: Answer: Correct option: (b) Explanation: Export is a component of aggregate demand. Due to a fall in…
Q: As described in the chapter, the Federal Reserve in 2008 faced a decrease in aggregate demand caused…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: The following events have occurred in the history of the United States: A deep recession hits the…
A: If a deep recession hits the world economy then the demand for US exports will fall. As the exports…
Q: An increase in the price of an imported resource will cause, Group of answer choices: The aggregate…
A: Aggregate supply represents the total quantity of output supplied at each price level. The…
Q: Long run macroeconomic equilibrium occurs when a. aggregate demand equals short run…
A: The potential output refers to the output level that gets produced when all resources of the economy…
Q: se the model of aggregate demand and short-run aggregate supply to explain how each of the following…
A: Hey, Thank you for the question. According to our policy we can only answer up to 3 sub parts per…
Q: aggregate price level and aggregate output Severe weather in Mpumalanga and Limpopo in January 2021…
A: Aggregate supply is a macroeconomic concept that helps in determining the total number of quantity…
Q: Answer questions a through F on the basis of the following graph: a. If the actual price level…
A: A gap is said to be expansionary if the actual GDP exceeds the potential level of GDP in the…
Q: Long-run: Assume you are examining the economy of India. Assume the Indian economy is initially in…
A: The economy is already at full employment level or economy is operating at equilibrium level. In the…
Q: The Great Depression showed that the short-run aggregate supply curve and the aggregate demand curve…
A: Prior to Great Depression the economy was working on Classical economic theory that assumes the…
Q: The following events have occurred in the history of the United States: A deep recession hits the…
A: Meaning of Inflation: The term inflation refers to the situation under which there is an excessive…
Q: During the transition from the short run to the long run, price level expectations will (remain the…
A: In the long run, when there is an decrease in consumption, it leads to increase in savings which…
Q: Imagine that in the current year the economy is in long-run equilibrium. Then the federal government…
A: Government purchases is a component of aggregate demand and decrease in goverment purchases results…
Q: Suppose that the economy is at long-run equilibrium. If there is a sharp decline in the stock market…
A: Financially, those for migration contend that settlers help the economy by expanding the work supply…
Q: How would the long-run equilibrium output change if the price level fell? Decrease, Increase or No…
A: The aggregate supply is the total amount of services and commodities that firms in an economic plan…
Q: The position of the long-run aggregate supply curve Group of answer choices: a. is determined by…
A: The long run aggregate supply curve is vertical, since there is no possibility of increasing output.…
Q: Unlike the Suez Canal, the Panama Canal is highly relevant for the US economy. A blockage of the…
A: Real GDP: - it is the inflation-adjusted value of all final goods and services produced in any…
Q: Assume that aggregate demand is unaffected by the gas tax holiday. After the economy has fully…
A: Due to the gas tax holiday, in the longrun, the aggregate demand curve will not be affected and a…
Q: Part 2 Answer questions a through F on the basis of the following graph: e. If the actual price…
A: e) Based on the graph, If the actual price level equals the expected price level reflected in long…
Q: The accompanying graph illustrates an economy in long-run equilibrium which is denoted by point ELR.…
A: Long-run equilibrium refers to a state in which the short-run aggregate demand curve, short-run…
The following events have occurred in the history of the United States:
- A deep recession hits the world economy.
- The world oil price rises sharply.
- S. businesses expect future profits to fall.
- Explain the separate effects of each event on U.S. real
GDP and the price level, starting from a position of long-run equilibrium.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- In the long-run, aggregate supply is a horizontal line at the long-run price level people can afford. True False One reason for why the aggregate demand curve slopes down is the wealth effect, which means that a higher price level leads to lower real wealth and, thereby, reduces the level of consumption. True FalseSuppose that the U.S. economy is at full employment when strong economic growth in Asia increases the demand for U.S.-produced goods and services. How the U.S. price level and real GDP will change in the short run?The following events have occurred in the history of the United States: A deep recession hits the world economy. The world oil price rises sharply. U.S. businesses expect future profits to fall. Explain the combined effects of these events on U.S. real GDP and the price level,starting from a position of long-run equilibrium.
- The short-run quantity of output supplied by firms will exceed the natural level of output when the actual price level ———-that people expected.The Greek letter a represents a number that determines how much output responds to unexpected changes in the price level. In this case, assume that a = $2 billion. That is, when the actual price level exceeds the expected price level by 1, the quantity of output supplied will exceed the natural level of output by $2 billion. Suppose the natural level of output is $60 billion of real GDP and that people expect a price level of 95. On the following graph, use the purple line (diamond symbol) to plot this economy's long-run aggregate supply (LRAS) curve. Then use the orange line segments (square symbol) to plot the economy's short-run aggregate supply (AS) curve at each of the following price levels: 85, 90, 95, 100, and 105. PRICE LEVEL 125 120 115 110 105 100 95 90 85 80 75 0 10 20 40 50 60 70 30 OUTPUT (Billions of dollars) 80 90 100 O AS LRAS ? The short-run quantity of output supplied by firms will fall short of the natural level of output when the actual price level level that…Suppose that M = 2000 and that k = 2. What is the price level P at which the economy is in long-run- equilibrium? Plot such an equilibrium on a diagram with P on the vertical axis and Y on the horizontal axis, by distinguishing between the short-run and the long-run equilibrium.
- If aggregate supply is vertical, then which of the following statements must be true? Aggregate demand does not affect the quantity of output. Inflation creates greater social benefits. Inflation will accompany any rise in output. Aggregate demand does not cause inflationary changes in price level.Assume that the United States economy is currently in a recession in a short-run equilibrium. Draw a correctly labeled graph of aggregate demand and aggregate supply in the recession and show each of the following. The current equilibrium output and price levels, labeled Ye and PLe, respectively.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…
- Assume that the economy is currently in short-rim equilibrium Use words and diagrams to describe what will happen to equilibrium price and equilibrium output in the following two cases. An increase in foreign real national (2.S) A flood in the country (2.5)In the short run, the quantity of output supplied by firms can deviate from the natural level of output if the actual price level deviates from the expected price level in the economy. A number of theories explain reasons why this might happen. For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer who expects a price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will (decrease/not change/increase) , and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by (raising/lowering) the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to (fall short of/exceed) the…The figure shown displays various economic outcomes. P₁ P₂ P3 PA Ps LRAS AD₁ SRAS₁ SRAS₂ SRAS3 AD3 AD₂ 글 E If the aggregate demand (AD) curve shifts from AD₁ to AD2, the resulting equilibrium price and output in the long run would be:
