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- Macroland is recognized as a high-income economy by the World Bank. The country of Macroland is now in a recession. Using a correctly labeled graph of the long run aggregate supply, short run aggregate supply, and aggregate demand curves and show each of the following: Current price level, labeled PL1 Current output, labelled Y1 Assume that Braveland, a major trading partner of Macroland, enters into a recession. Explain the effect on Macroland exports to Braveland On your graph in part (a) above, show the effect of the change identified in part (b) (i) above on real output in Macroland. How would this change in real output in Macroland affect unemployment in Macroland? Assume the recession in Braveland causes a decrease in the demand for Macroland dollars in the foreign exchange market. Braveland’s currency is the euro. Explain whether the euro will appreciate, depreciate, or remain…Macroland is recognized as a high-income economy by the World Bank. The country of Macroland is now in a recession. Using a correctly labeled graph of the long run aggregate supply, short run aggregate supply, and aggregate demand curves and show each of the following: Current price level, labeled PL1 Current output, labelled Y1 Assume that Braveland, a major trading partner of Macroland, enters into a recession. Explain the effect on Macroland exports to Braveland On your graph in part (a) above, show the effect of the change identified in part (b) (i) above on real output in Macroland. How would this change in real output in Macroland affect unemployment in Macroland? Assume the recession in Braveland causes a decrease in the demand for Macroland dollars in the foreign exchange market. Braveland’s currency is the euro. Explain whether the euro will appreciate, depreciate, or remain…Macroland is recognized as a high-income economy by the World Bank. The country of Macroland is now in a recession. Using a correctly labeled graph of the long run aggregate supply, short run aggregate supply, and aggregate demand curves and show each of the following: Current price level, labeled PL1 Current output, labelled Y1 Assume that Braveland, a major trading partner of Macroland, enters into a recession. Explain the effect on Macroland exports to Braveland On your graph in part (a) above, show the effect of the change identified in part (b) (i) above on real output in Macroland. How would this change in real output in Macroland affect unemployment in Macroland? Assume the recession in Braveland causes a decrease in the demand for Macroland dollars in the foreign exchange market. Braveland’s currency is the euro. Explain whether the euro will appreciate, depreciate, or remain…
- 3. Why the aggregate demand curve slopes downward The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 120, and the quantity of output demanded is $500 billion. Moving up along the aggregate demand curve from point A to point B, the price level rises to 140, and the quantity of output demanded falls to $300 billion. 170 180 150 B 140 130 A 120 110 AD 100 90 100 200 300 400 500 600 700 800 REAL GDP (Billions of dollars) PRICE LEVELAn increase in productivity will: Multiple Choice increase aggregate supply. increase aggregate supply and aggregate demand. decrease aggregate supply and aggregate demand. increase aggregate demand.Classify each scenario based on whether it increases or decreases aggregate demand (AD) Increases Aggregate Demand Decreases Aggregate Demand Answer Bank the relative price of foreign goods decreases interest rates fall for businesses only consumers expect income taxes to rise in the future businesses believe that income taxes fall a billion dollars falls from the sky the government buys airplanes consumer demand will fall in the future interest rates decrease
- An increase in aggregate demand when the economy is operating at near full capacity is likely to result in: An increase in both output and the overall price level. An increase in output but no increase in the overall price level. An increase in the overall price level but no increase in output. No increase in either output or the overall price level.According to the net exports effect, as the price level falls relative to the rest of the world, Group of answer choices foreigners buy fewer goods. foreigners buy more U.S. goods. the aggregate demand curve shifts to the left. the aggregate demand curve shifts to the right.Fill in the missing values in the table by selecting the change in each scenario required to decrease aggregate demand. Change Required to Decrease AD Interest rates Domestic currency value relative to the foreign currency Consumer expectations about future profitability Government spending
- A rise in prices of imported resources will cause aggregate:Suppose a country’s population is growing due to immigration. In the long run, output will ________ due to ________. remain unaffected; price adjustment increase; an increase in short-run aggregate supply increase; an increase in long-run aggregate supply increase; an increase in both long-run and short-run aggregate supply increase; an increase in aggregate demand Which of the following would cause an upward movement along the aggregate demand curve? The value of the dollar increases. There is an increase in expected income. There is an increase in the expected price level. An increase in the price level increases the value of real wealth. An increase in housing prices increases the value of real wealth.A sudden increase in consumer spending will shift the aggregate demand curve to the right and lower the price level/inflation and increase the level of GDP output. True /False