1. Discuss what factors shift the LRAS curve to the right (what increases long run aggregate supply). 2. Explain the following shifts by using the LRAS-AD diagram : a) Increase in both equilibrium real GDP and price level. b) A decrease in equilibrium real GDP and an increase in price level.

1. Discuss what factors shift the LRAS curve to the right (what increases long run aggregate supply). 2. Explain the following shifts by using the LRAS-AD diagram : a) Increase in both equilibrium real GDP and price level. b) A decrease in equilibrium real GDP and an increase in price level.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

18. Use the AD/AS model to illustrate the following. Draw 6 graphs by hand. Show how the AD or the AS curve shift and in what direction (left or right). Also state what happens to equilibrium real GDP (Y), employment, and the equilibrium price level. [Note: Use the SRAS curve, not the LRAS.] a. an increase in government spending and/or transfer payments b. restrictive fiscal policy c. expansive monetary policy d. increase in investment according to Keynesians e. increase in investment according to supply-side economists f. a stock market crash
The figure to the right shows the determination of the economy's short run equilibrium price level and aggregate output (income). Draw a single line or curve (either AD or AS) such that a new equilibrium occurs with a lower price level and a higher output (income). NOTE: Shifts in AD require the line drawing tool while the three-point curved line drawing tool is used to shift AS. Properly label your new line or curve. Note: Carefully follow the instructions above, and only draw the required object. Which of the following events could have caused this particular change? A. A sharp increase in immigration. B. An increase in bad weather and natural disasters. OC. A reduction in the country's labor force participation rate. OD. An increase in entrepreneurial-stifling taxes and regulations. Price level, P Aggregate output (income), Y ASO ADO O
Name some factors that could cause AD to shift, and say whether they would shift AD to the right or to the left.
The graph below shows the AD-AS diagram for Spain. All numbers are in billions. 1. What is the size of real GDP in the short-run equilibrium? answer "a". 2. What is the price level in the short-run equilibrium? answer "b". 3. What is the level of Potential GDP in Spain? answer "c".
Q2
Which of the following is a major difference between the AD-AS model and the dynamic AD-AS model? The dynamic AD-AS model assumes OA. AD only includes consumption, investment, and government purchases, while the AD-AS model assumes AD includes consumption, investment, government purchases and net exports. B. the SRAS is stable and will not shift, while the AD-AS model assumes the SRAS can only change with an exogenous event such as oil price changes. OC. the economy does not experience long-run growth, while the AD-AS model assumes there is constant inflation in the economy. OD. potential GDP increases continually, while the AD-AS model assumes the LRAS does not change.
Name 4 causes for the Aggregate Demand (AD) Curve to shift. Why might changes in those variables shift AD?
Not sure what to do for the graph and what's correct
Some advocates have suggested that the United States should move to a universal health care plan paid for at the federal level, like Medicare, which would be funded out of general tax revenues. Such a plan, it is argued, would guarantee quality health care to all. Ignoring all the controversy surrounding such a plan, how would the introduction of universal health care paid for from tax revenues impact short-run aggregate supply? On long-run aggregate supply?
on Indicate whether the following factor will affect aggregate demand (AD) or aggregate supply (AS) and whether the effect would be an increase or a decrease. Then indicate what will happen to the price level and the level of Real GDP and what type of equilibrium will result assuming that the economy is initially in long-run equilibrium. a) A decrease in the nominal wage rate. b) A decrease in exports. c) A decrease in the exchange rate. d) The discovery of vast new oil field in AD no effect decrease + increase no effect AS increase no effect increase increase decrease decrease decrease Real GDP increase decrease increase increase Equilibrium recessionary gap ⇒ inflationary gap inflationary gap inflationary gap AP ? Q Fir
q. Consider the following scenarios and briefly explain how each scenario would affect short-run aggregate supply (SAS), long-run aggregate supply (LAS) or aggregate demand (AD) in Canada. In some situations, more than one may be affected. 1. Canada produces larger number of university graduates who possess higher levels of education and skill. 2. Depletion of resources cause increase in the prices of key inputs in production. 3. Canada’s trading partners experience higher rates of economic growth. 4. Increase in oil prices raises the value of Canadian dollar.
Based on Aggregate Demand and Aggregate Supply Model, what is the effect on AD of each of the following events (will AD increase and shift to the right or decrease and shift to the left): A decrease in individual taxes. A decrease in government spending. An increase in interest rates.