End of Chapter 3.5a Ques The graph shows the economy in long-run equilibrium at point A. LRAS, SRAS, Now assume that there is a large increase in demand for U.S. exports. 1.) Use the line drawing tool to show the resulting short-run equilibrium on your diagram. Label any new aggregate demand or aggregate supply curve as AD2, SRAS2 or LRAS2 as appropriate. 2.) Use the point drawing tool to locate the new short- run equilibrium point. Label this point B. Now consider the adjustment of the economy back to long-run equilibrium. 3.) Use the line drawing tool to show the resulting long-run equilibrium on your diagram. Label any new aggregate demand or aggregate supply curve appropriately. 4.) Use the point drawing tool to locate the new long- run equilibrium point. Label this point C. Carefully follow the instructions above, and only draw the required objects. AD, Real GDP (trillions of 2012 dollars) Price level (GDP Deflator, 2012 = 100)

End of Chapter 3.5a Ques The graph shows the economy in long-run equilibrium at point A. LRAS, SRAS, Now assume that there is a large increase in demand for U.S. exports. 1.) Use the line drawing tool to show the resulting short-run equilibrium on your diagram. Label any new aggregate demand or aggregate supply curve as AD2, SRAS2 or LRAS2 as appropriate. 2.) Use the point drawing tool to locate the new short- run equilibrium point. Label this point B. Now consider the adjustment of the economy back to long-run equilibrium. 3.) Use the line drawing tool to show the resulting long-run equilibrium on your diagram. Label any new aggregate demand or aggregate supply curve appropriately. 4.) Use the point drawing tool to locate the new long- run equilibrium point. Label this point C. Carefully follow the instructions above, and only draw the required objects. AD, Real GDP (trillions of 2012 dollars) Price level (GDP Deflator, 2012 = 100)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter23: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 2PA

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Explain why the following statements are false.a. “The aggregate-demand curve slopes downwardbecause it is the horizontal sum of the demandcurves for individual goods.”b. “The long-run aggregate-supply curve is verticalbecause economic forces do not affect long-runaggregate supply.”
Explain what will happen as a result of the following events. In each case, draw an aggregatedemand and short-run aggregate supply diagram showing the initial equilibrium output level (Y0) andprice level (P0). Show any changes, indicate the final equilibrium output level and price level andexplain briefly.a. The economy is in a recession. An increase in government purchases occurs. The Fedtries to maintain the interest rate. b. The economy is operating near full capacity. Now environmental pollution standardsare tightened substantially.
The figure given below represents the equilibrium real GDP and price level in the aggregate demand and aggregate supply model Figure 8.3 U.S. Price Level B O AD, toAD; O AD, to AD₂ O AD₂ to AD₁ O AS, to AS; AS; to AS₂ 100 200 300 400 AS3 AS₁ AD₂ 500 Real GDP (billions of dollars) AD AS₂ AD3 In Figure 8.3, which of the following shifts would result in stagflation (economic stagnation and inflation)?
In 2019, before the Covid-19 pandemic began affecting the U.S. economy, Nouriel Roubini of New York University identified "three negative supply shocks that could trigger a global recession by 2020." What is a negative supply shock? OA. Any event that causes consumers to unexpectedly increase their consumption, shifting aggregate supply to the left OB. An event that causes an unexpected change in production costs or technology, shifting short-run aggregate supply to the left OC. An event that causes an unexpected change in production costs or technology, shifting long-run aggregate supply to the left OD. Any event that causes firms to sell more goods than they can produce, shifting aggregate supply to the left
8. Do the following events have their initial impact on aggregate demand, long run aggregate supply, or short run aggregate supply? Do the curves shift to the right or to the left? Show, using a graph for each question. a. The new government in Canada increases income taxes. AD/AS/LRAS: Equilibrium Price: Equilibrium Quantity: b. There has been an increase in investment in postsecondary education in Canada AD/AS/LRAS: Equilibrium Price: Equilibrium Quantity: c. Canada experiences downward pressure on nominal wages. AD/AS/LRAS: Equilibrium Price:, Equilibrium Quantity: 9 6
Explain the influence of the following events on the quantity of real GDP supplied and aggregate supply in India. When fuel prices rise When the price level in India increases A. short-run aggregate supply decreases; the quantity of real GDP supplied increases O B. long-run aggregate supply decreases; short-run aggregate supply increases OC. long-run aggregate supply increases; the quantity of real GDP supplied increases OD. short-run aggregate supply increases; the quantity of real GDP supplied decreases The graph gives the long-run aggregate supply curve and the short-run aggregate supply curve for India. Suppose Canadian firms move their call handling, IT, and data functions to India. The full-employment price level does not change. If long-run aggregate supply changes, draw the new long-run aggregate supply curve and label it. If short-run aggregate supply changes, draw the new short-run aggregate supply curve and label it. Draw a point at the full-employment price level at…
Using aggregate demand and aggregate supply, graph the effects on the price level and GDP of each of the following. Draw a large graph and label all axes, initial and final equilibrium points, direction of shift if any, all curves and lines, equilibrium values on the x- and y-axes. State the conclusion in words. a. A cut in income taxes b. An increase in military spending c. A drop in export demand by foreign purchasers d. An increase in imports e. A decline in business investment spending
The U.S. economy is in both short-run and long-run equilibrium, as shown in the graph below. Assume the federal government decides to decrease personal income taxes. a. Show the effect on the short-run equilibrium as a result of the decrease in taxes. Using the graph, draw either the new AD curve or new AS curve resulting from this change. Instructions: Use the tool provided "New Curve" to plot the appropriate line. After placing the curve, click on "Select" and choose whether to label the curve "AD1" or "AS1" from the dropdown menu.
Explain whether each of the following events shiftsthe short-run aggregate-supply curve, the aggregatedemand curve, both, or neither. For each event thatdoes shift a curve, draw a diagram to illustrate theeffect on the economy.a. Households decide to save a larger share of theirincome.b. Florida orange groves suffer a prolonged period ofbelow-freezing temperatures.c. Increased job opportunities overseas cause manypeople to leave the country.
37.6% R Give Up? O Hint ment Score: Resources Chec on 5 of 15 <. In 2013, Prussia's aggregate demand curve was determined by the equation M +0= 4%. A change in aggregate demand means that in 2014, Prussia's aggregate demand curve was determined by the equation M +6= 7%. Using this information, draw Prussia's old and new dynamic aggregate demand curves on the graph. Which of the factors could have resulted in the change in 14 aggregate demand seen between 2013 and 2014? 13 O an improvement in technology 12 11 an increase in imports 10 a decrease in oil prices 8. AD 2013 O higher consumer confidence 7. 5. -3 -2 -1 3. 6. 10 Real GDP growth rate F12 AD 2014 4. 6, 4. Inflation rate
Illustrate and interpretthe short-run andlong-run aggregatesupply curves
es/118790/quizzes/952344/take OS D SU My ASU ASU CANVAS Question 2 Which of the following would cause a shift in the short-run aggregate supply curve, but no change in the long-run aggregate supply curve? O an increase in the size of the labor force an increase in the wage rate an increase in the quantity of capital O all of the above would shiftboththe long-run aggregate supply curve and the short-run aggregate supply curve. Question 3 Which of the following would NOT lead to a shift in the long- run aggregate supply curve? O An increase in the money supply. 1