12. 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 2021 and 2022, the aggregate demand curve (AD) shifts from AD₁ to AD2, the short-run aggregate supply curve (SRAS) shifts from SRAS, to SRAS2, and the long-run aggregate supply curve (LRAS) shifts from LRAS, to LRAS2. PRICE LEVEL (CPI) LRAS, AD₁ LRAS₂ The inflation rate between 2021 and 2022 is SRAS, 6.6 REAL GDP (Trillions of dollars) 6.8 ▼ SRAS₂ AD₂ The growth rate of full-employment output between 2021 and 2022 is Which of the following best explains the economic developments from 2021 to 2022? O The economy operated at full-employment output in 2021, but the subsequent increase in aggregate demand was not enough to restore the economy to full-employment output, leading to a recessionary gap in 2022. OA strong increase in aggregate demand allowed the economy to grow out of a recessionary gap in 2021 to full employment in 2022. O The economy experienced cost-push inflation.
12. 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 2021 and 2022, the aggregate demand curve (AD) shifts from AD₁ to AD2, the short-run aggregate supply curve (SRAS) shifts from SRAS, to SRAS2, and the long-run aggregate supply curve (LRAS) shifts from LRAS, to LRAS2. PRICE LEVEL (CPI) LRAS, AD₁ LRAS₂ The inflation rate between 2021 and 2022 is SRAS, 6.6 REAL GDP (Trillions of dollars) 6.8 ▼ SRAS₂ AD₂ The growth rate of full-employment output between 2021 and 2022 is Which of the following best explains the economic developments from 2021 to 2022? O The economy operated at full-employment output in 2021, but the subsequent increase in aggregate demand was not enough to restore the economy to full-employment output, leading to a recessionary gap in 2022. OA strong increase in aggregate demand allowed the economy to grow out of a recessionary gap in 2021 to full employment in 2022. O The economy experienced cost-push inflation.
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 5PA
Related questions
Question
![12. 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 2021 and 2022, the aggregate demand
curve (AD) shifts from AD₁ to AD2, the short-run aggregate supply curve (SRAS) shifts from SRAS, to SRAS2, and the long-run aggregate
supply curve (LRAS) shifts from LRAS, to LRAS2.
PRICE LEVEL (CPI)
110
106
LRAS,
AD₁
LRAS
The inflation rate between 2021 and 2022 is
SRAS,
6.6
REAL GDP (Trillions of dollars)
6.8
SRAS2
AD₂2
The growth rate of full-employment output between 2021 and 2022 is
(?)
Which of the following best explains the economic developments from 2021 to 2022?
O The economy operated at full-employment output in 2021, but the subsequent increase in aggregate demand was not enough to restore
the economy to full-employment output, leading to a recessionary gap in 2022.
O A strong increase in aggregate demand allowed the economy to grow out of a recessionary gap in 2021 to full employment in 2022.
O The economy experienced cost-push inflation.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2f1f4244-ea20-41e4-96d4-712a6966a88b%2F8f99e42f-9ca6-476e-b8e0-e8a414dcf8af%2Ff6hnms3_processed.jpeg&w=3840&q=75)
Transcribed Image Text:12. 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 2021 and 2022, the aggregate demand
curve (AD) shifts from AD₁ to AD2, the short-run aggregate supply curve (SRAS) shifts from SRAS, to SRAS2, and the long-run aggregate
supply curve (LRAS) shifts from LRAS, to LRAS2.
PRICE LEVEL (CPI)
110
106
LRAS,
AD₁
LRAS
The inflation rate between 2021 and 2022 is
SRAS,
6.6
REAL GDP (Trillions of dollars)
6.8
SRAS2
AD₂2
The growth rate of full-employment output between 2021 and 2022 is
(?)
Which of the following best explains the economic developments from 2021 to 2022?
O The economy operated at full-employment output in 2021, but the subsequent increase in aggregate demand was not enough to restore
the economy to full-employment output, leading to a recessionary gap in 2022.
O A strong increase in aggregate demand allowed the economy to grow out of a recessionary gap in 2021 to full employment in 2022.
O The economy experienced cost-push inflation.
![Which of the following best explains the economic developments from 2021 to 2022?
O The economy operated at full-employment output in 2021, but the subsequent increase in aggregate demand was not enough to restore
the economy to full-employment output, leading to a recessionary gap in 2022.
O A strong increase in aggregate demand allowed the economy to grow out of a recessionary gap in 2021 to full employment in 2022.
O The economy experienced cost-push inflation.
Which of the following are possible reasons for the rightward shift of the LRAS curve between 2021 and 2022? Check all that apply.
The accumulation of capital such as factories, equipment, and machinery
An improvement in technology
The accumulation of human capital](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2f1f4244-ea20-41e4-96d4-712a6966a88b%2F8f99e42f-9ca6-476e-b8e0-e8a414dcf8af%2F5n0z644_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Which of the following best explains the economic developments from 2021 to 2022?
O The economy operated at full-employment output in 2021, but the subsequent increase in aggregate demand was not enough to restore
the economy to full-employment output, leading to a recessionary gap in 2022.
O A strong increase in aggregate demand allowed the economy to grow out of a recessionary gap in 2021 to full employment in 2022.
O The economy experienced cost-push inflation.
Which of the following are possible reasons for the rightward shift of the LRAS curve between 2021 and 2022? Check all that apply.
The accumulation of capital such as factories, equipment, and machinery
An improvement in technology
The accumulation of human capital
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 6 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Essentials of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337091992/9781337091992_smallCoverImage.gif)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Principles of Macroeconomics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781285165912/9781285165912_smallCoverImage.gif)
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:
9781285165912
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Essentials of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337091992/9781337091992_smallCoverImage.gif)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Principles of Macroeconomics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781285165912/9781285165912_smallCoverImage.gif)
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:
9781285165912
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Brief Principles of Macroeconomics (MindTap Cours…](https://www.bartleby.com/isbn_cover_images/9781337091985/9781337091985_smallCoverImage.gif)
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Principles of Economics, 7th Edition (MindTap Cou…](https://www.bartleby.com/isbn_cover_images/9781285165875/9781285165875_smallCoverImage.gif)
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Principles of Macroeconomics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305971509/9781305971509_smallCoverImage.gif)
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:
9781305971509
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning