09. The left-hand Which of the following statements is tru about the diagrams above depicting the macroeconommy in both Keynesian and Classical frameworks and a change from AEo to AE* and ADo to AD*? a) The left-hand diagrams show the effect of an increase in Aggregare Expenditures (and Aggregate Demand), where the short-run Aggregate Supply is horizontal, meaning a constant products price level. b) The right hand diagrams show the effect of an increase in Aggregate Expenditrues (and Aggregate DEmand), where short-run Aggregate Supply is vertical (constant Aggregate Quantity Supplied). c) The left-hand diagrams illustrate the Keynesian range of the shor-run Aggregate Supply curve, where Keynesian expansionary policy does not cause any inflation and thus is very effective. d) The right-hand diagrams illustrate the Classical or Monetarist range of the short-run Aggregate Supply curve, where Keynesian expansionary policy is totally dissipated in inflation and thus is totally ineffective. e) All the above 6060Q50AJE*50AE*40AEo40AEo303020101010203040502030real GDP=Qreal GDP = Q104050AS808070706060505040AS4030AD30AD*202010ADo10ADo10203040500 1020304050real GDP = Qreal GDP = QPrice levelExpenditures, IncomeExpenditures, IncomePrice level20

The classical and Keynesian framework are both completely different in the models of aggregate…

Answered: The left-hand Which of the following…

Survey of Economics (MindTap Course List)

9th Edition

ISBN:9781305260948

Author:Irvin B. Tucker

Publisher:Irvin B. Tucker

Chapter11: Gross Domestic Product

Section: Chapter Questions

Problem 13SQ

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09. The left-hand Which of the following statements is tru about the diagrams above depicting the macroeconommy in both Keynesian and Classical frameworks and a change from AEo to AE* and ADo to AD*?

		a) The left-hand diagrams show the effect of an increase in Aggregare Expenditures (and Aggregate Demand), where the short-run Aggregate Supply is horizontal, meaning a constant products price level.
		b) The right hand diagrams show the effect of an increase in Aggregate Expenditrues (and Aggregate DEmand), where short-run Aggregate Supply is vertical (constant Aggregate Quantity Supplied).
		c) The left-hand diagrams illustrate the Keynesian range of the shor-run Aggregate Supply curve, where Keynesian expansionary policy does not cause any inflation and thus is very effective.
		d) The right-hand diagrams illustrate the Classical or Monetarist range of the short-run Aggregate Supply curve, where Keynesian expansionary policy is totally dissipated in inflation and thus is totally ineffective.
		e) All the above

60
60
Q
50
AJE*
50
AE*
40
AEo
40
AEo
30
30
20
10
10
10
20
30
40
50
20
30
real GDP=Q
real GDP = Q
10
40
50
AS
80
80
70
70
60
60
50
50
40
AS
40
30
AD
30
AD*
20
20
10
ADo
10
ADo
10
20
30
40
50
0 10
20
30
40
50
real GDP = Q
real GDP = Q
Price level
Expenditures, Income
Expenditures, Income
Price level
20

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