1. Imagine that the markup practiced by firms in an economy is 5% The degree of the protection of employees is 0.1 and assume that the slope of the wage setting curve is -0.7 If production in the country's firms happens with constant returns to scale, what is going to be the equation of the short-run aggregate supply curve in terms of
Q: 6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of…
A: According to the sticky wage theory, changes in organisation performance or the state of the economy…
Q: Indicate whether the descriptions that follow are short-run aggregate supply curves, long-run…
A: Short-run aggregate supply curve:- The amount of overall production that will be generated at each…
Q: In the short run, the quantity of output supplied by firms can deviate from the natural level of…
A: Meaning of Gross Domestic Product (GDP):The term gross domestic product refers to the situation…
Q: The graph shows the economy in long-run equilibrium. Then the world economy expands and the demand…
A: Aggregate demand is the sum of consumption, investment, government spending and net export. AD = C +…
Q: If input prices change at exactly the same rate as output prices, the aggregate supply curve will be…
A: Aggregate supply highlights the overall supply of goods and services that are produced within the…
Q: b) Discuss the sticky wage model of aggregate supply curve
A: Sticky wage theory is the degree of response to the performance of the companies with respect to the…
Q: The United Kingdom’s economy is in short-run equilibrium with an output level at less than full…
A: The full employment output is determined by the long-run supply curve. It is determined at the point…
Q: you want, you can) TO MAKE EXPLANATION IS SO İMPORTANT.NOTE THAT: DESCRIPTION ≠
A: Aggregate supply or total output is the total supply of services and goods being produced at a given…
Q: Suppose the economy produces real GDP of $60 billion when unemployment is at its natural rate. Use…
A: In the short the the supply curve is AS which is directly proportional to the price level but in the…
Q: . Assuming Aggregate Demand and Aggregate Supply are initially at ADo and ASo respectively, which of…
A: When the labor force is fully employed, the economy is effectively using its resources, which…
Q: The table shows the aggregate demand and short-run aggregato supply schedulos of Chamber Island in…
A: Deflation: - it is the phenomenon of a decrease in the prices of goods and services in an economy.
Q: In 2006, the economy of Aptonville had an aggregate demand and aggregate supply according to the…
A: Aggregate Demand (AD) is the total demand (dd) for all the goods (commodities) and services in an…
Q: Which of the following would cause the long run aggregate supply to decrease? O. A civil war in the…
A: Aggregate supply refers to total supply of goods and services that is produced in an economy at a…
Q: (a) Suppose the natural rate of unemployment for the economy is 5 percent and the economy is…
A: Unemployment refers to the state of a person or individual who is actively looking for job or work…
Q: The following graph shows an increase in short-run aggregate supply (AS) in a hypothetical economy…
A: Aggregate supply is the quantity of goods supplied by all the firms in the economy at different…
Q: This is a more difficult question relating to the AS curve. Read the textbook chapter and chapter…
A: The whole supply of goods and services produced within an economy at a certain overall price in a…
Q: Asap 9. Which of the following explain why the Aggregate Supply curve is upward sloping?…
A: Aggregate demand refers to the overall quantity of goods or services that an economy demand over a…
Q: Aggregate Supply Aggregate Demand Price Level rGDP Price level rGDP 115 620 100 660 640 120 110 650…
A: *Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: If the long run aggregate supply curve shifts, does the short run aggregate supply curve also have…
A: The short run aggregate supply slopes upwards while the long run supply curve is vertical. The long…
Q: Which of the following reasons could explain why the aggregate quantity of output supplied changes?…
A: Investment expenditure, also referred to as gross private domestic investment, encompasses the…
Q: The long run aggregate supply curve shifts to the right given that A there is a fall in the quantity…
A: The long-run aggregate supply (LRAS) curve depicts the potential level of output produced by an…
Q: Assume that the economy is in a full employment equilibrium. There is an improvement in overa…
A: Answer: (A)
Q: Suppose firms become very optimistic about future business conditions and invest heavily in new…
A: If firms become very optimistic about future business conditions and invest heavily in new capital…
Q: Assume that the United States economy is currently in a recession in a short-run equilibrium. Draw…
A: Assuming the economy of United States is currently in recession in a short run equilibrium.…
Q: 9. Which of the following explain why the Aggregate Supply curve is upward sloping? a) As the…
A: Aggregate demand refers to the overall quantity of goods or services that an economy demand over a…
Q: nterpret the change you drew on the previous graph by filling in the blanks in the following…
A: The long run supply curve depicts the potential output of the economy. It is known as potential…
Q: Suppose there is an international recession hits the US economy, what is the long-run equilibrium…
A: The explanation that at whatever point the economy enters a downturn, its long-run run aggregate…
Q: Determine the effect on aggregate demand/ Short Run Agrregate supply of each of the following…
A: Hi there! Since you have posted a question with multiple sub-parts, we will solve the first three…
Q: Assume the economy of Chile is in a long-run equilibrium with full employment. In the short run,…
A: The long-run aggregate supply curve is the graphical representation of aggregate supply data in the…
Q: 37.6% R Give Up? O Hint ment Score: Resources Chec on 5 of 15 <. In 2013, Prussia's aggregate demand…
A:
Q: What would be the effect of an unexpected increase in the price of oil on a graph showing aggregate…
A: An unexpected increase in the price of oil will increase the cost of production for many firms. This…
Q: Question 8 Which of the following changes would NOT shift the short-run aggregate supply curve? A an…
A: Short Run Aggregate Supply highlights the number of commodities a nation would be willing to supply…
Q: The upward slope of the short-run aggregate supply curve is based on the assumption that: 1)…
A: When talking about aggregate demand and aggregate supply, the slope of thise curves depends upon…
Q: Suppose firms become very optimistic about future business conditions and invest heavily in new…
A: (a) If firms are optimistic about future business conditions and invest in new capital equipment,…
Q: Which of the following would cause the aggregate supply curve to increase... A) Energy prices such…
A: Aggregate Supply curve is an upward sloping curve showing positive relationship between price level…
Q: Suppose the United States passes a law that requires large businesses to provide one year of paid…
A: Factors affecting aggregate supply curve:- 1) Cost of Raw material:- Change in cost of raw material…
Q: The economy is in long run equilibrium. Congress’s passage of new laws significantly increasing the…
A: Note: You have uploaded multiple questions at a time. Hence, we shall answer only the first one for…
Q: Suppose that exports fall. Which of the following describes how the economy will adjust on its own…
A: Answer: Correct option: (b) Explanation: Export is a component of aggregate demand. Due to a fall in…
Q: Suppose the table below shows the schedules for aggregate demand and short-run aggregate supply in…
A: Aggregate demand depicts the combination of the price level and aggregate quantity demanded.…
Q: For a given aggregate supply curve, if the aggregate price level in an economy rises, O real GDP…
A: The aggregate supply is the total amount of services and commodities that firms in an economic plan…
Q: 10-8. Assume that the position of a nation's aggregate demand curve has not changed, but the…
A: Aggregate demand represents the total demand for all finished goods and services produced in an…
Q: A movement up a given aggregate demand curve is the result of
A: Demand is regarded as an economic principle which refers to a consumers desire to buy goods and…
Q: The aggregate supply (AS) function shows that as price levels rise, firms will supply less output…
A: The total supply of goods and services produced in an economy within an aspect time period is called…
Q: Suppose that firms become very pessimistic about future business conditions and cut heavily on…
A: The supply depends upon the price level in the economy. when the price level is higher, the…
Step by step
Solved in 2 steps
- 6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products in advance, based on an expected price level of 100 for the coming year. Many of the firms sell their goods through catalogs and face high costs of reprinting if they change prices. The actual price level turns out to be 90. Faced with high menu costs, the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will v , and firms that rely on catalogs will respond by v the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected…Refer to the diagram. The initial aggregate demand curve is AD1 and the initial aggregate supply curve is AS1. In the long run, the aggregate supply curve is vertical in the diagram because: A) nominal wages and other input prices are assumed to be fixed. B) real output level Qf is the potential level of output. C) price level increases produce perfectly offsetting changes in nominal wages and other input prices. D) higher than expected rates of actual inflation reduce real output only temporarily.24. If the short-run aggregate supply increases by less than the long-run aggregate supply, then, at the short-run equilibrium, A) GDP will be below potential GDP. B) aggregate demand will increase. C) GDP will be above potential GDP. D) GDP will be equal to the potential GDP 25. A negative supply shock in the short run causes A) the aggregate supply curve shifts to the left. B) the price level to fall. C) unemployment to fall. D) equilibrium real GDP to rise.
- 5. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-wage theory asserts that output prices adjust more quickly to changes in the price level than wages do, in part because of long-term wage contracts. Suppose a firm signs a contract agreeing to pay its workers $15 per hour for the next year, based on an expected price level of 100. If the actual price level turns out to be 110, the firm's output prices will v, and the wages the firm pays its workers will remain fixed at the contracted level. The firm will respond to the unexpected increase in the price level by the quantity of output It supplles. If many firms face simlarly rigld wage contracts, the unexpected Increase In the price level causes the quantity of output…Consider the graph at right. The economy is initially in short-run equilibrium at point D and worker wages adjust to the economic conditions. Move the cursor on the graph at night to the new short-run equilibrium point Price level, P P2 P1 PO AS(long run 4 hamma AS (short run) AS AD₁ AD YO Y1Y2 Aggregate output (income), YGiven the following circumstances, indicate whether or not the aggregate supply curve would shift and, if so, which way would it shift: The price of a barrel of oil doubles An advance in alternative energy technology significantly reduces its cost In order to maintain a relatively clean air quality, a carbon emissions tax is levied against firms with a carbon footprint As a result of fracking, the price of natural gas is significantly reduced Advances in technology increase the productivity of the American worker, on average, by 30%
- Assume that the accompanying graph depicts aggregate supply and demand conditions in an economy. Full employment occurs when $5 trillion of real output is produced. The economy is currently in equilibrium at point A. Price Level (average price) 260 240 220 200 180 160 140 120 100 0 1 A AS₁ 2 3 4 5 6 7 AD₁ Real Output (in trillions of dollars per year) 8 Tools EQ Instructions: In parts a, b, and d, enter your responses as a whole number. a. What is the equilibrium rate of output? $ trillion per year b. How far short of full employment is the equilibrium rate of output? $ trillion c. On the graph, illustrate a shift of aggregate demand that would change the equilibrium rate of output to $5 trillion. Instructions: Shift the aggregate demand curve (AD1) such that the equilibrium in the macro model is at $5 trillion. Then use the tool provided 'EQ' to label the new equilibrium. d. What is the price level at this full-employment equilibrium?Describe the change in aggregate supply that should result from each of the following changes in determinants. Assume that nothing else is changing besides the identified change. (In your answer, indicate whether the change will "Decrease" or "Increase" aggregate supply or have no effect.) (a) A rise in the average price of inputs; (b) An increase in worker productivity; (c) Government antipollution regulations become stricter; (d) A new subsidy program is enacted for new business investment in productive equipment; (e) Energy prices decline.rview - eBay S... ➜ Oculus AasightCH. Score: 31/87 40/70 answered Question 33 1200+ 1100- 1000- 900- 800- 700- 1600- 500- Price Level 400- 300- 200 100- Google Cloud ser... AD SMOOT The graph below shows the Long-Run Aggregate Supply Curves (LRAS) for the US. ▼ Hint LRASI LRASI Leaf Dashboard LRAS2 100 200 300 400 500 600 700 800 90010001100120 Real GDP What event could shift LRAS from LRAS1 (black color) to LRAS2 (red color) in the US? O Increase in capital. O Decrease in labor. O Decrease in human capital. HEX PROXIES Sc
- Suppose the economy is in the long-run equilibrium. b. Now suppose war in the world's main oil- producing region sharply reduces the world oil supply, causing oil prices to rise and increasing the costs of producing goods and services in this economy. Use your diagram to show what happens to output and the price level in the short run. c. Use the sticky-wage theory of aggregate supply to explain what will happen to output and the price level in the long run (assuming there are no policy changes). What role does the expected price level play in this adjustment? Be sure to illustrate your analysis in a graph.6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products in advance, based on an expected price level of 100 for the coming year. Many of the firms sell their goods through catalogs and face high costs of reprinting if they change prices. The actual price level turns out to be 90. Faced with high menu costs, the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will , and firms that rely on catalogs v will respond by v the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected…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