secenario 4

docx

School

Broward College *

*We aren’t endorsed by this school

Course

ECO2013

Subject

Economics

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by MinisterSnow24467

Demauri Simpson Professor, A Eco2013 2-6-23 Scenario 4 Which curve, aggregate demand (AD), short run aggregate supply (SRAS) or long run aggregate supply ( LRAS) would immediately shift in response to the crisis in Zed and? In which direction (left or right? Explain your rationale. In other words, why does the curve shift? The aggregate demand (AD) curve for Manulo would probably shift immediately as a result of the Zedland disaster. This is because Manulo's goods would be less in demand in Zedland, a significant trading partner, if itss economy declined. The AD curve would move to the left because of this decline in export demand since it would lower Manulo's total demand for goods and services. 2. Compare the expected movements in equilibrium GDP and price level in the short run. In other words compared to the starting point (before the shift) what happened to output and price level (increased, decreased or stayed the same) and after the shift? This leftward change in the AD curve would cause Manulo's equilibrium GDP and price level to decline in the near term.This is due to the fact that a decline in demand would result in an excess of products and services, which would force businesses to lower their prices and reduce output, which would lower GDP. 3. Compare the expected movements in equilibrium GDP and price level in the long run. In other words, compared to the starting point (before the shift) what happened to output and price level (increased, decreased or stayed the same) and after the shift? Over the time, Manulo's economy would adapt to this decline in demand. To the reaction to the decline in demand the businesses would lower their prices and wages, which would cause the short run aggregate supply (SRAS) curve to move to the right. The GDP would reach full employment again, but the price level would drop as a result. This is due to the fact that the economy eventually self-adjusts and will reach full employment at any price point. 4. The president wants you to explain how does the economy of Manulo transition from the short run equilibrium to the long run equilibrium so he can decide whether to put together an economic policy response. In other words, what is the difference between the long run and the short run and how does an economy move from one equilibrium to the other? Shortterm equilibrium gives a to long-term equilibrium when businesses and employees drop their expectations and accept lower pay and prices. This process will involve a couple of periods of unemployment and financial difficulty and this may take some time to complete. To expedite this process of adjustment and lessen the adverse effects of the decline in demand, the president would want to think about enacting economic measures. These could take the form of fiscal policies to cut taxes

and enhance government expenditure, or monetary measures to decrease interest rates and expand the money supply.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Related Documents

Week 6 Discussion 1.docx

Ch4 - Supplemental Exercise - Analogizing and Distinguishing.docx

Nathaniel Walker WORKBOOK FALL 2023 (3).xlsx

LO2 Step 5 Illustrate How Different Factors Impact Market Equilibrium and How Market Equilibrium Is

HW1_chapters_1_2_4.pdf

Discussion Board.docx

Assignment 2 W19 (1).docx

BUS 8301 - Unit I Class Discussion.docx

Solution.pdf

Case Study 1 Page 2.png

Additional questions

Practice exer Ch 4 (BECN 150 (st) F-23 .docx

Recommended textbooks for you

Essentials of Economics (MindTap Course List)

Economics

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:Cengage Learning

Brief Principles of Macroeconomics (MindTap Cours...

Economics

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:Cengage Learning

Macroeconomics: Private and Public Choice (MindTa...

Economics

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

Economics: Private and Public Choice (MindTap Cou...

Economics

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

Economics:

Economics

ISBN:9781285859460

Author:BOYES, William

Publisher:Cengage Learning

Survey Of Economics

Economics

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Cengage,

SEE MORE TEXTBOOKS

Recommended textbooks for you

Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics:
Economics
ISBN:9781285859460
Author:BOYES, William
Publisher:Cengage Learning
Survey Of Economics
Economics
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Cengage,