2. Suppose that a presidential candidate who promised large personal income tax cuts is elected. Use the AD-AS model to predict short-run changes in real GDP and the aggregate price level. Aggregate price level ESR PE SRAS Short-run macroeconomic equilibrium AD YE Real GDP
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- Suppose Mexico, one of our largest trading partners and purchaser of a large quantity of our exports, goes into a recession. Use the AD/AS model to determine the likely impact on our equilibrium GDP and price level.Assume an economy operates in the intermediaterange of its aggregate supply curve. State thedirection of shift for the aggregate demandor aggregate supply curve for each of thefollowing changes in conditions. What is theeffect on the price level? On real GDP? Onemployment?a. The price of crude oil rises significantly.b. Spending on national defense doubles.c. The costs of imported goods increase.d. An improvement in technology raises laborproductivity.Explain whether each of the following events shiftsthe short-run aggregate-supply curve, the aggregatedemand curve, both, or neither. For each event thatdoes shift a curve, draw a diagram to illustrate theeffect on the economy.a. Households decide to save a larger share of theirincome.b. Florida orange groves suffer a prolonged period ofbelow-freezing temperatures.c. Increased job opportunities overseas cause manypeople to leave the country.
- Which of the following will NOT shift the ADTT curve? O a. A rise in consumer confidence O b. A rise in interest rates O c. A rise in government spending O d. A rise in exportsAssume an economy operates in the intermediate range of its aggregate supplycurve. For each of the following changes in conditions, state the direction of theeffect on:1. aggregate demand, 2. aggregate supply, 3. price level, and 4. real GDP. (a) An increase in government expenditure in infrastructureClick or tap here to enter text.(b) A severe recession occurs in a country, which has been a major importer of thenation’s exports.Click or tap here to enter text.(c) The federal government increases business taxesClick or tap here to enter text.(d) The Central Bank increases the cash interest rateIn the self-correcting AD-AS model, the economy’sshort-run equilibrium position is indicatedby the intersection of which two curves?a. Short-run aggregate supply and long-runaggregate supplyb. Short-run aggregate supply and aggregatedemandc. Long-run aggregate supply and aggregatedemandd. Long-run aggregate demand and short-runpersonal consumption expenditures
- Which of the following will NOT shift the ADT curve? O a. A rise in government spending O b. A rise in exports Ос. A rise in interest rates O d. A rise in consumer confidence"The following chart indicates the aggregate demand (AD) and short-run aggregate supply (SRAS) schedules of decision- makers for the current period. Both buyers and sellers previ- ously anticipated that the price level during the current period would be P 105 a. Indicate the quantity of GDP that will be produced during this period. b. Will it be a long-run equilibrium level of GDP? Why or why not? c. What will the relationship between the actual and natural rates of unemployment be during the period? Explain 20 your answer.Congratulationst You have been appointed an economic policy adviser to the United States, You are told that the economy is significantly abowe futtemplyoment GDP. Based on this inlormation, how can the economy would adjust to reach LR.SR Equilbrium (Classical View)? The economy wilt experience low unemployment rate, pushing wages up, and increasing the pelces of a key input (labor). shatting the sAS to the left (up). The economy will experience high unemployment rate, pushing wages down, and reducing the prices of a key input (labor). shiting the SAS to the right (down). The econoriny wil experience low unemployment rate, decreasing inceme, which will eventually shift the AD to the left. The eooncmy will experience low unemployment rate, pushing wages up, and increasing the prices of a key input (labor), shiting the sAs to the night (down).
- 1) aggregate demnad and aggregate supply in market a) using an ad-as diagram, explain what happens if personal income taxes increases b) explain what will happen to an ad-as diagram, if there is a decrease in input prices c) explain the changes in wages can affect equilibriumplease give me corrrect answer Dont use chatGPTIn 2013, Prussia's aggregate demand curve was determined by the equation M + 1-4% A change in aggregate demand means that in 2014, Prussia's aggregate demand curve was determined by the equation Using this information, draw Prussia's old and new dynamic aggregate demand curves on the graph Which of the factors could have resulted in the change irn aggregate demand seen between 2013 and 2014? 13 AD 2013 an improvement in technology O an increase in imports O higher consumer confidence O a decrease in oil prices 12 AD 2014 10 8 5 4 3 2 4 -3 2 1 0 1 2 3 4 5 6 78 9 10 Real GDP growth rate
