1. Aggregate supply definitionsThe short-run aggregate supply curve shows:What happens to output in an economy as the actual price level changes, holding all other determinants ofreal GDP constantWhat happens to output in an economy when the government spends more moneyHow firms respond to changes in interest ratesThe relationship between the price level and aggregate expenditureThe term potential output refers to:The quantity of output produced when the price level is the same as firms and workers expected when theyagreed on resource prices and wagesThe quantity of output that would be produced if every member of the labor force worked 40 hours per weekThe quantity of output produced at the intersection of the AD and AS curvesThe maximum possible output for an economyIn macroeconomics, the term short run refers to:A period of time long enough for all resource prices and wages to be renegotiatedA period of 10 yearsA period of time in which some resource prices and wages are fixedA period of 1 year

Aggregate supply refers to the total quantity of goods or services that a nation produce in a period…

1. Aggregate supply definitions The short-run aggregate supply curve shows: What happens to output in an economy as the actual price level changes, holding all other determinants of real GDP constant What happens to output in an economy when the government spends more money How firms respond to changes in interest rates The relationship between the price level and aggregate expenditure

1. Aggregate supply definitions The short-run aggregate supply curve shows: What happens to output in an economy as the actual price level changes, holding all other determinants of real GDP constant What happens to output in an economy when the government spends more money How firms respond to changes in interest rates The relationship between the price level and aggregate expenditure

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Why the aggregate demand curve slopes downward The graph below shows the aggregate demand (AD) curve for a hypothetical economy. At point X, the quantity of output demanded is $500 billion, and the price level is 120. Moving up along the AD curve from point X to point Y, the quantity of output demanded falls to $300 billion, and the price level rises to 140. PRICE LEVEL 170 160 150 140 130 120 110 100 90 Y X AD (?
2. Describe the concept of aggregate demand and aggregate supply?
7. Increase in the aggregate demand and long-run aggregate supply curves Consider the dynamic aggregate demand and aggregate supply diagram for a hypothetical economy. Between 2041 and 2042, the aggregate demand curve (AD) shifts from AD₁ to AD2, the short-run aggregate supply curve (SRAS) shifts from SRAS₁ to SRAS2, and the long-run aggregate supply curve (LRAS) shifts from LRAS₁ to LRAS₂. PRICE LEVEL (CPI) 100 96 LRAS₁ LRAS₂ AD1 SRAS 10.2 10.6 REAL GDP (Trillions of dollars) SRAS₂ AD2 ?
3. What is the difference between the long-run aggregate supply (LRAS) and the short-run aggregate supply (SRAS) curves? Give examples of factors that decrease SRAS. Which way does the SRAS curve shift?
1. The basic aggregate demand and aggregate supply curve model help explain A) fluctuations in real GDP and the price level. B) long-term growth. C) price fluctuations in an individual market. D) output fluctuations in an individual market. 2. The demanded. shows the relationship between the price level and quantity of real GDP A) consumer price index B) aggregate expenditure line C) 45-degree line D) aggregate demand curve
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Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? A) A general increase in energy and labor cost for businesses. B) A general decrease in labor cost for businesses. C) An increase in productivity. D) A federal government increase in spending.
Note: Line segments will automatically connect the points. PRICE LEVEL (Billions of dollars) 200 160 120 0 80 160 240 REAL GDP (Index numbers) The equilibrium price level is 320 400 Initial AD The change in government spending the multiplier effect. SRAS New AD ✓, and the equilibrium level of real output is Suppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. the equilibrium level of real output by . The price level increase
1. Write a report to show and explain how Resources price increase will affect the equilibrium price leveland real GDP, use an aggregate demand and aggregate supply diagram: Please use graph/diagram to support your answer. I
3. A fall in the price level shifts the aggregate supply curve upward and decreases the quantity of real GDP supplied. Answer: Reason: Page 2 of 5
3. Explain how each of the following will affect aggregate demand. In each case, draw a diagram to show the effect on the aggregate demand curve. (c) The government passes legislation that increases the rate of corporate taxes. (d) Inflation leads the central bank to increase the base interest rate.