19. Which set of changes is definitely predicted to raise Real GDP in the short run? a. Wealth increases and there is an adverse supply shock. b. Individuals expect higher (future) incomes and wage rates fall. c. Business taxes rise and wage rates fall. d. The U.S. dollar appreciates and there is a beneficial supply shock. e. none of the above 20. Which set of changes is definitely predicted to raise the price level in the short run? a. The money supply falls and wage rates rise. b. The money supply falls and wage rates fall. c. Labor productivity rises and there is a beneficial supply shock. d. The prices of nonlabor inputs rise and individuals expect higher (future) incomes.

19. Which set of changes is definitely predicted to raise Real GDP in the short run? a. Wealth increases and there is an adverse supply shock. b. Individuals expect higher (future) incomes and wage rates fall. c. Business taxes rise and wage rates fall. d. The U.S. dollar appreciates and there is a beneficial supply shock. e. none of the above 20. Which set of changes is definitely predicted to raise the price level in the short run? a. The money supply falls and wage rates rise. b. The money supply falls and wage rates fall. c. Labor productivity rises and there is a beneficial supply shock. d. The prices of nonlabor inputs rise and individuals expect higher (future) incomes.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter22: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 12P

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Question

19. Which set of changes is definitely predicted to raise Real GDP in the short run?
a. Wealth increases and there is an adverse supply shock.
b. Individuals expect higher (future) incomes and wage rates fall.
c. Business taxes rise and wage rates fall.
d. The U.S. dollar appreciates and there is a beneficial supply shock.
e. none of the above
20. Which set of changes is definitely predicted to raise the price level in the short run?
a. The money supply falls and wage rates rise.
b. The money supply falls and wage rates fall.
c. Labor productivity rises and there is a beneficial supply shock.
d. The prices of nonlabor inputs rise and individuals expect higher (future) incomes.

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5. An economy is initially in equilibrium, both in the short-run and in the long-run. Using the AD, SRAS, and LRAS curves, show and explain what would happen to the equilibrium aggregate price and output in both the short-run and the long-run if the following scenario occurs. a. Oil production increases significantly as OPEC and non-OPEC countries have agreed to raise their production quota, and the government anticipates the situation by implementing a contractionary fiscal policy. b. COVID 19 pandemic has forced the government to initiate a total lock down.
Suppose the economy is in long-run equilibrium. If there is a sharp decline in the stock market combined with a temporary increase in oil price, then we would expect that in the short run, a. real GDP will rise and the price level might rise, fall, or stay the same. b. real GDP will fall and the price level might rise, fall, or stay the same. c. the price level will rise, and real GDP might rise, fall, or stay the same. d. the price level will fall, and real GDP might rise, fall, or stay the same. 20. Suppose the economy is in long-run equilibrium. If there is a sharp decline in the stock market combined with a temporary increase in oil price. then we would expect that in the short run, real GDP will rise and the price level might rise, fall, or stay the same. real GDP will fall and the price level might rise, fall, or stay the same. c. the price level will rise, and real GDP might rise, fall, or stay the same. d. the price level will fall, and real GDP might rise, fall, or stay the…
Question:4,5
Refer to the table below. Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 Instructions: Enter your anwers as whole numbers. A). What is the equilibrium level of output? What is the equilibrium price level? B). Suppose that aggregate demand increases such that the amount of real output demanded rises by $ 7 billion at each price level. Insert the new values for real output demanded in the table below. Real Output Demanded, Billions New Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 What is the new equilibrium level of output? What is the new equilibrium price level? By what percentage will the price level increase? Will this inflation be demand-pull inflation or will it be cost-push inflation? C) If potential real GDP ( that is, full-employment GDP) is $ 510…
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