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.
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- 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?Create a graph for an aggregate demand curve. Use the variable ‘Price Level’ for the vertical axis and ‘Real GDP’ for the horizontal axis. In your answer, explain why there is an inverse relationship between the price level and real GDP. Use your graph to illustrate your explanations. Also, discuss determinants of Aggregate Demandor factors that shift Aggregate Demand curve.The U.S. economy is in both short-run and long-run equilibrium, as shown in the graph below. Assume the federal government decides to decrease personal income taxes. a. Show the effect on the short-run equilibrium as a result of the decrease in taxes. Using the graph, draw either the new AD curve or new AS curve resulting from this change. Instructions: Use the tool provided "New Curve" to plot the appropriate line. After placing the curve, click on "Select" and choose whether to label the curve "AD1" or "AS1" from the dropdown menu.
- Assume that the United States is currently in a recession. a. Draw a correctly labelled graph of aggregate demand and aggregate supply showing each of the following in the United States: i. Output level ii. Price level AAssume that the housing market is in equilibrium in year 1. In year 2, the mortgage rate that banks charge consumers decreases, but producers are not affected. Also in year 2, the cost of lumber used to build homes increases. Which of the following is most likely to be the equilibrium change? Price S 8 E C D 0 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The equilibrium will be at point C before the change in expectations and point B after the change b The equilibrium will be at point A before the change in expectations and point B after the change с The equilibrium will be at point A before the change in expectations and point E after the change d The equilibrium will be at point E before the change in expectations and point C after the change la Quantity: Suppose the economy is initially in the long-run equilibrium in the real output market.a. Draw the initial long run equilibrium. Label the diagram clearly
- 6. Suppose political turmoil causes a significant decrease in oil production in the middle east. How will real GDP, employment, and the general price level be affected in the short run? 7. How will the event described in question 6 affect real GDP, employment, and the general price level in the long run? Explain in words and a graph.10. Great Depression In 1939, with the U.S. economy not yet fully recovered from the Great Depression, President Roosevelt proclaimed that Thanksgiving would fall a week earlier than usual so that the shopping period before Christmas would be longer. Graph A Graph B LRAS Aggregate Supply Aggregate Demand Price Level LRAS Quantity of Output Price Level Aggregate Supply Aggregate Demand Quantity of OutputAdjust the graph to show the effect of a decrease in the aggregate price level. look at image Which of the statements offers the best explanation for the change demonstrated in the graph? a. Prices of goods and services decrease on average. b. Consumers purchase less of one product, like cars, and more of another, like clothing. c. The law of demand dictates the behavior of the aggregate demand curve. d. The prices of a few goods in the market dropped substantially.
- What are the factors other than price that can shift aggregate demand curve interms of investment and consumption? Also explain graphically.Create a graph for an aggregate demand curve. Use the variable ‘Price Level’ for the vertical axis and ‘Real GDP’ for the horizontal axis. Then explain why there is an inverse relationship between the price level and real GDP. Use your graph to illustrate your explanations. Also, discuss determinants of Aggregate Demand or factors that shift Aggregate Demand curve.Question Help What is the effect of a rise in the price of oil on the U.S. economy? How does the economy return to its long-run equilibrium? What is stagflation? Price level (GDP price index, 2012=D100) 145- The graph shows the U.S. economy at a full-employment equilibrium. Draw a curve that shows the effect of a rise in the price of oil. Label it 1. Draw a point at the new macroeconomic equilibrium. Label it E1. Potential GDP 135- ASO Draw a curve that shows the economy returning to a full-employment equilibrium with no action by the central bank or the 125- government. Label it 2. Draw a point at the full-employment equilibrium. Label it E2. 115- Stagflation 105- O A. occurs when aggregate demand decreases by more than aggregate supply increases 95- O B. is another name for an inflationary gap ADO O C. has not been experienced in the United States since the Great Depression 85- 18.0 19.0 20.0 21.0 22.0 O D. is a combination of recession and inflation. Real GDP (trillions of 2012…