2. Draw a graph that shows the economy currently in long-run equilibrium. a. Suppose that household wealth has been falling for several months. Given this, adjust your graph to show both the short-run change in the price level and real GDP. b. Describe how the economy will adjust in the long run. Using the graph you drew in part a, show this adjustment to long-run equilibrium.

2. Draw a graph that shows the economy currently in long-run equilibrium. a. Suppose that household wealth has been falling for several months. Given this, adjust your graph to show both the short-run change in the price level and real GDP. b. Describe how the economy will adjust in the long run. Using the graph you drew in part a, show this adjustment to long-run equilibrium.

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

The percentage change in the overall level of prices in an economy is called a. contraction.
The long run in macroeconomics is the period of time in which prices do not change or do not change very much. True False Cliok to select your answer.
For each of the following, please explain each step and show it in the graph! a. Assume an economy is at full employment, but then consumer spending rises. What will most likely happen in the short run?
3. For each question, draw an economy in equilibrium, labeling the initial equilibrium price level and equilibrium quantity of Real GDP. Then shift the appropriate curve and label the new equilibrium price and equilibrium quantity. Next, fill in the blanks to describe what happened. (i) There is a decrease in wealth. The price level will and Real GDP will 1 (ii) There is a decrease in productivity. The price level will and Real GDP will
In order to mitigate the economic impacts of the COVID-19 recession, the Government plans to run large budget deficits to improve infrastructure and build more public and transitional houses in New Zealand. Briefly describe the impact of this budget plan (with everything else held constant) on the following variables in the short run. (a) aggregate demand; (b) the price level; (c) the supply of loanable funds; (d) the real interest rate; (e) the relative attractiveness of NZD-denominated assets; (f) net foreign investment; (g) the exchange rate of the NZ dollar; (h) NZ exports (i) NZ imports; (j) the value of NZ net exports.
Suppose the people of Canada has reduced their spending on goods and services from the United States. What will be the effect on real GDP and the price level in the short run? In the long run? Show your results graphically.
Describe how different parts of the economy may have experienced shifts and changes in supply and demand. Provide at least 4 examples.
Refer to image; please show work
During the last two years there has been a depletion of groundwater in the nation because of a severe drought in the country. 1. Which of the two graphs above is correct? Explain why. 2. What happened to real GDP in the selected graph? Why? 3. What happened to the price level in the selected graph? Why? 4. What happened to aggregate demand and aggregate supply Why?
What is the relationship between the price level and the following components of aggregate demand? a. There is (a negative/ no / a positive) relationship between the price level and consumption. b. There is (a negative/no/ a positive) relationship between the price level and investment. c. There is (a negative/no/ a positive) relationship between the price level and government spending. d. There is (a negative/no/ a positive) relationship between the price level and net exports.
# I am guessing, the price of imports will decrease is wrong.
Which of the graphs represents the state of the economy before this pronouncement? Graph A Graph B True or False: President Roosevelt was trying to decrease aggregate supply. O True False